Mass Incarceration USA: How a Broken System Perpetuates Itself


“Wheel about and turn about and do just so. Every time I turn about I jump Jim Crow.” 
— chorus of an 1828 minstrel song

“We have not ended racial caste in America, we have merely redesigned it.”
Michelle AlexanderThe New Jim Crow

Yeah, it’s called mass incarceration. Our jails are filled with black and brown men and women. The number of inmates, primarily people of color, has soared sevenfold in the last three decades, according to Alexander, from 300,000 to more than 2 million, the largest number, by far, in the developed world. Many millions more are on probation or parole. And no matter what their crime, the inmates never get their citizenship back. The stigma of being an ex-felon brands someone for life as a second-class human being.

But even before the ex-felon label is attached, certain people — young men of color, in particular — are targeted as society’s losers by the police, judicial bureaucracy and prison system. They face the possibility of police harassment, invasion of privacy and arrest, often on the smallest pretext possible, pretty much any time they step outside.

I live in a vital, racially and ethnically diverse Chicago neighborhood and I watch it happen — racial profiling, the stop-and-frisk game. This is not making my neighborhood safer. It’s wrecking lives at enormous public expense and, of course, like the insane war on terror, creating enemies. We don’t need a justice system based on stereotypes and armed bullying.

“His hearing’s at 1? OK,” I said, “I’ll try to make it.”

This was three days ago. Oh God. It was pretty much the last thing I wanted to do. I knew what had happened. A few days earlier, a young man, Jerry, who is part of a local discussion and support group I’ve gotten involved with called Circles and Ciphers, had gotten arrested . . . for riding his bicycle on the sidewalk.

That’s how it started. Two plainclothes officers stopped him for what legally is known as a petty offense, the equivalent of jaywalking or letting your parking meter expire — and a “crime” committed every day by happy families, children, all sorts of people who want to avoid dangerous street traffic. Jerry, who is a black man, wasn’t simply stopped. He was arrested. After all, he had committed a crime. He was handcuffed, put into the squad car, taken to the local police station.

No one I’ve talked to has any idea what happened to his bike. Was it confiscated? Left at the scene?

He may have been upset by the possibility of losing his bike. He may have been upset by the fact that he was supposed to be starting a new job the following day. In any case, he found himself sitting in handcuffs at the police station. When one of the arresting officers approached him, Jerry allegedly stood up and kicked at the officer, hitting him in the shin. And the petty offense suddenly turned into a felony. He was charged with aggravated assault.

Chicago, crime-ridden city! This is how the statistics swell.

Jerry’s hearing was on Monday. The Circles and Ciphers organizers wanted to get supporters in the courtroom; apparently that can make a difference. I had never done anything quite like this before.

Indeed, the court building is alien territory: the state vs. everyone. I understand the point of metal detectors, airport-style security screenings, and try to have a sense of humor about emptying my pockets, taking off my belt. I tried to maintain the attitude of a citizen: This is my court system. I have a right to be here. But it wasn’t easy. I felt at best warily tolerated and, in fact, unwelcome as a full citizen.

I sat down in the courtroom. When the hearing began, I took a pen and piece of paper out of my pocket and started scribbling notes. Uh-oh. Suddenly the security officer tasked with keeping order in the court gave me an angry stare, pointed at me and shook her head. No notes! I couldn’t believe it, but stuck the Bic pen, dangerous tool, back in my pocket, vowing to check the legality of this restriction later. (There is none.)

The hearing itself lasted all of, maybe, six or seven minutes. A public defender asked the police officer what happened. He explained that the defendant had been arrested for the misdemeanor of riding his bike on the sidewalk, but the judge interrupted him. Riding a bike on the sidewalk is a petty offense, not a misdemeanor, she said. I wasn’t aware there was a category of crime more trivial than a misdemeanor; now I knew. A few questions later — the officer described the alleged assault, testified that he did not require medical attention — and it was all over. Jerry was led from the courtroom. I got up and left.

There’s more to come, of course. Jerry wasn’t released. The case wasn’t thrown out. What hangs in the balance for the young defendant is possible jail time and the lifelong scar of “ex-felon.” To what end? Public safety wasn’t served. No healing took place. Absolutely nothing was accomplished by this elaborate and costly drama except that a broken system perpetuated itself. And Jim Crow won again.

Robert C. Koehler

Robert Koehler is an award-winning, Chicago-based journalist and nationally syndicated writer. His new book, Courage Grows Strong at the Wound is now available. Contact him at koehlercw@gmail.com or visit his website at commonwonders.com.

When workers die: “And nobody called 911″


A man is scalded by boiling water and citric acid at a plant. His fate points to a dark reality for temp workers

BY  AND , Salon.com

When workers die: Carlos Centeno, a Chicago-area temporary worker who died after a workplace accident, and his partner, Velia Carbot.
This story was reported by the Center for Public Integrity and WBEZ. An audio version ran on the APM radio program “The Story,” and is printed here as part of Salon’s partnership with the show. To listen to the report, click here.

CHICAGO — By the time Carlos Centeno arrived at the Loyola University Hospital Burn Center, more than 98 minutes had elapsed since his head, torso, arms and legs had been scalded by a 185-degree solution of water and citric acid inside a factory on this city’s southwestern edge.

The laborer, assigned to the plant that afternoon in November 2011 by a temporary staffing agency, was showered with the solution after it erupted from the open hatch of a 500-gallon chemical tank he was cleaning. Factory bosses, federal investigators would later contend, refused to call an ambulance as he awaited help, shirtless and screaming. He arrived at Loyola only after first being driven to a clinic by a co-worker.

At admission Centeno had burns over 80 percent of his body and suffered a pain level of 10 on a scale of 10, medical records show. Clad in a T-shirt, he wore no protective gear other than rubber boots and latex gloves in the factory, which makes household and personal-care products.

Centeno, 50, died three weeks later, on Dec. 8, 2011. The Cook County medical examiner’s report attributed his death to “scald and chemical burns due to an industrial accident.”

A narrative account of the accident that killed him — and a description of conditions inside the Raani Corp. plant in Bedford Park, Ill. — are included in a U.S. Occupational Safety and Health Administration memorandum obtained by the Center for Public Integrity. The 11-page OSHA memo, dated May 10, 2012, argues that safety breakdowns in the plant warrant criminal prosecution — a rarity in worker death cases.

The story behind Centeno’s death underscores the burden faced by some of America’s 2.5 million temporary, or contingent, workers — a growing but mostly invisible group of laborers who often toil in the least desirable, most dangerous jobs. Such workers are hurt more frequently than permanent employees and their injuries often go unrecorded, new research shows.

Raani’s “lack of concern for employee safety was tangible” and injuries in its factory were “abundant,” Thomas Galassi, head of OSHA’s Directorate of Enforcement Programs, wrote in the memo to David Michaels, assistant secretary of labor for occupational safety and health.

Raani managers failed to put Centeno under a safety shower after he was burned and did not call 911 even though his skin was peeling and he was clearly in agony, Galassi wrote. “It took a minimum of 38 minutes before (Centeno) arrived at a local occupational health clinic … after having been transported by and in the vehicle of another employee while he shivered in shock and yelled, ‘hurry, hurry!’ ”

A clinic worker called an ambulance, which, according to Chicago Fire Department records, arrived at 2:26 p.m. Centeno was in “moderate to severe distress with 70-80% 1st and mostly 2nd degree burns to head, face, neck, chest, back, buttocks, arms and legs,” the records show. Paramedics administered morphine.

“The EMT’s were horrified and angered at the employer, for not calling 911 at the scene and further delaying his care by transferring him to a clinic instead of a hospital,” Galassi’s memo says.

John Newquist, who retired from OSHA in September after 30 years with the agency, said the case was among the most disturbing he encountered as an assistant regional administrator in Chicago.

“I cannot remember a case where somebody got severely burned and nobody called 911,” said Newquist, a former compliance officer who investigated more than 100 fatal accidents during his career. “It’s beyond me.””

On May 15, OSHA proposed a $473,000 fine against Raani for 14 alleged violations, six of which are classified as willful, indicating “plain indifference” toward employee safety and health. No decision has been made on whether the case will be referred to the Department of Justice for possible prosecution, agency spokesman Jesse Lawder said. OSHA hadn’t inspected the Raani factory for 18 years prior to the accident.

Centeno’s family has filed a wrongful-death lawsuit against Raani and a workers’ compensation claim against the temp agency that employed him, Ron’s Staffing Services Inc.

“It’s just wrong, what happened,” Centeno’s 26-year-old son, Carlos Jr., said of Raani managers’ actions after his father’s accident. “They were not thinking of him as a human being.”

Raani is appealing the OSHA citations. H. Patrick Morris, a lawyer for the company, did not answer questions about the alleged violations. In a court filing, however, Raani denied allegations of negligence in the family’s lawsuit. Among its defenses: Centeno himself was responsible for the accident. “Plaintiff’s Decedent knew about the hazards of his conduct, but proceeded with his course of conduct, causing the claimed injuries,” the document says.

Jeffrey Kehl, a lawyer for Ron’s Staffing, declined to comment.

“I wanted him to quit”

Carlos Centeno came to Chicago from Mexico City in 1994. He was joined six years later by his partner, Velia Carbot, and Carlos Jr. A daughter, Alma, stayed behind.

The family settled in Humboldt Park, a working-class neighborhood on the city’s northwest side. A second daughter, Melanie, was born in 2001.

Centeno held jobs as a bartender, newspaper deliveryman and forklift driver at a warehouse. In June 2010, after being laid off by the warehouse, he put in an application at the Ron’s Staffing office on West 63rd Street, not far from Midway International Airport. He was sent to the nearby Raani Corp. factory, which makes products ranging from shampoos, styling gels and deodorant sticks to dishwashing liquids and household cleaners. His starting pay was $8.25 an hour.

Raani, founded in 1983 by Rashid A. Chaudary, a chemist turned entrepreneur, has about 150 employees, roughly 40 percent of whom are contingent workers, according to the May 2012 OSHA memo. Centeno cleaned the tanks in which the factory’s products are mixed. His work clothes became so rank, he had his own laundry basket at the family’s apartment, partner Carbot said; about six months before the fatal accident, chemicals splashed in his right eye and he couldn’t see out of it for three days, she said.

“I wanted him to quit,” Carbot, speaking in Spanish, said. “But, at the same time, we knew he hadn’t found another job yet, and expenses continued, unfortunately, and he had to work.”

The OSHA memo describes a factory in which workers were often hurt and injuries were not properly recorded. An OSHA inspection on Dec. 9, 2011, the day after Centeno died, revealed, for example, that workers “were handling chemicals including, but not limited to, corrosives and acids while wearing only medical grade latex gloves,” the memo says.

Workers were seen putting their hands directly into streams of chemicals poured from drums, OSHA enforcement director Galassi wrote. “Another significant hazard (to) which employees are exposed, as evidenced by the fatality, was the high temperature (nearly boiling) water and cleaning solutions used for cleaning tanks, process lines and floors. Employees interacted with high temperature liquids wearing only latex gloves and tee-shirts.”

A manager explained that thick, black gloves were kept in the maintenance department “because they were expensive and the employees stole them,” Galassi wrote. The manager said, however, that “any employee could obtain the black gloves if so desired.”

A review of Raani’s medical files turned up five injuries, apart from Centeno’s, that had occurred since 2010 but had not been entered in OSHA logs, as required by federal law, Galassi wrote. Injuries “involving chemical exposure to eyes, high temperature liquid burns and cuts had been a common occurrence for years,” his memo says. One worker who had been burned and whose skin was peeling was told by a manager “to leave it alone, it wasn’t dangerous.”

Another was burned so badly he needed skin grafts, but the incident wasn’t recorded even though CEO Chaudary “stated he was aware of the injury,” Galassi wrote. On Jan. 27, 2012, more than two months after Centeno was scalded, a worker performing a similar tank-cleaning procedure received severe burns to his left leg. He was handed a written notice from management. “You are hereby warned to be careful in the future,” it said, in part, according to Galassi’s memo.

“Instead of issuing the appropriate (protective gear) to its workers and ensuring its usage, Raani Corporation has chosen to blame their employees outright for their injuries and non-compliance,” Galassi wrote.

Two managers “admitted to witnessing (Centeno) with his shirt off and speaking with him” shortly after he was burned, the memo says. “Both managers agreed the injured employee’s skin was burned, damaged, wrinkled and parts were ‘peeling.’ ”

The managers not only failed to call 911 — they made Centeno wait while one filled out paperwork before allowing him to be taken to a local clinic, Galassi wrote. The co-worker who drove Centeno about four miles to the MacNeal Clearing Clinic said “he was asked to lie on his written statement and write that Carlos Centeno was acting fine, conscious and talking on the drive to the clinic,” the memo says. “Even after the incident, company officials have not concluded that 911 should have been called immediately.”

Chaudary, who was not on the scene the day of the accident — Nov. 17, 2011 — told an OSHA inspector that the “wrong valve opened” on the tank Centeno was cleaning, according to the memo, but insisted that “if Carlos Centeno had lived, the decision to not call an ambulance would have been the right call.”

Centeno’s co-workers, however, “provided signed statements of the severity of the injury and the extreme delayed response in seeking medical care,” Galassi wrote.

Chaudary did not respond to requests for comment.

Not long after he was doused with the hot water-citric acid mixture, Centeno called Velia Carbot, asking for Carlos Jr. He sounded agitated and had trouble speaking, Carbot said, but would not explain what had happened.

Carbot went across the street and got Carlos Jr., who called his father’s cellphone. It was answered by a co-worker, Samuel Meza, who said Carlos Sr. had been burned at work. “He was like, ‘I’m taking him to the clinic,’” Carlos Jr. said.

Meza called Carlos Jr. after he arrived at the MacNeal Clearing Clinic. While they talked, Carlos Jr. said, “I could hear that the nurse in the clinic was telling him, ‘Why are you bringing him here? … He needs to go to the emergency room.’”

Carbot and Carlos Jr. said they began driving to the clinic, 13 miles south of Humboldt Park, but diverted west to Loyola Hospital when Meza told them that’s where Centeno would be heading.

Carlos Jr. and Carbot got there first, watching ambulance after ambulance pull up. “I remember just walking up to all the ambulances and it was someone else,” Carlos Jr. said. “It wasn’t my dad. It just makes you more anxious.”

At 3:08 p.m., more than 98 minutes after he had been burned, Carlos Sr. made it to Loyola. “When they finally opened the doors and I saw it was him, I could just see he was in pain,” Carlos Jr. said. “He was trying to hide it. He saw my mom and I could see his eyes started to tear.”

Carlos Centeno Sr. died three weeks later. OSHA, which learned of his death from the Cook County medical examiner, began its inspection of Raani the next day. Its last visit to the plant had been in 1993, when, responding to a worker complaint, it cited the company for six alleged violations — including failing to protect workers from unexpected energizing or start-up of machines — and proposed a $9,500 fine. Raani settled the case for $6,500 in 1994.

In an emailed statement, OSHA said no follow-up inspection was conducted. This is “not unusual,” the agency said, “as long as we receive documentation from the employer that the violations were corrected.”

Dangers of temp work

The use of contingent workers by U.S. employers has soared over the past two decades. In 1990, according to the U.S. Bureau of Labor Statistics, there were about 1.1 million such workers; as of August 2012, the number was 2.54 million, down slightly from pre-recession levels but climbing.

The American Staffing Association, a trade group, says the hiring of contingent workers allows employers to staff up at their busiest times and downsize during lulls. Temporary work enables employees to have flexible hours and “provides a bridge to permanent employment,” the group says on its website.

Recent research, however, suggests a dark side to contingent work.

study published this year of nearly 4,000 amputations among workers in Illinois found that five of the 10 employers with the highest number of incidents were temp agencies. Each of the 10 employers had between six and 12 amputations from 2000 through 2007. Most of the victims lost fingertips, but some lost legs, arms or hands.

The researchers, from the University of Illinois at Chicago School of Public Health, called the glut of amputations a “public health emergency,” inflicting psychological and physical harm and costing billions.

Another study, published in 2010, found that temp workers in Washington state had higher injury rates than permanent workers, based on a review of workers’ compensation claims. In particular, temp workers were far more likely to be struck by or caught in machinery in the construction and manufacturing industries.

“Although there are no differences in the (OSHA) regulations between standard employment workers and temporary agency employed workers, those in temporary employment situations are for the most part a vulnerable population with few employment protections,” wrote the researchers, with the Washington state Department of Labor and Industries.

In fact, experts say, there’s little incentive for host employers to rigorously train and supervise temp workers because staffing agencies carry their comp insurance. If an agency has a high number of injuries within its workforce, it — not the host employer — is penalized with higher premiums.

“This is really about an abdication of responsibility,” said Tom Juravich, a professor at the University of Massachusetts, Amherst, who has studied the temp worker phenomenon. “If some of the jobs in your facility are undesirable and dangerous, you outsource them to people who won’t complain. If you have a direct worker who’s injured, you have an obligation to him through workers’ comp. If he’s a contingent worker, you don’t have that obligation.”

As part of a three-year study, researchers in Canada interviewed temp workers and managers at temp agencies and client companies. “To be frank,” one agency manager confided, “clients hire us to have temps do the jobs they don’t want to do.” Co-author Ellen MacEachen, of the University of Toronto and the Institute for Work and Health, said, “Even if (temp workers) are not cheaper, they’re more disposable. … You can get rid of them when you want, and you don’t pay benefits.”

Stephen Dwyer, general counsel for the American Staffing Association, denied that the temp workers have less legal protection than permanent employees.

“I can say nationally, and on a state level, the legal framework is there to ensure the safety of the temporary employees,” he said. “And this framework imposes obligations on both the staffing firm and the client and so one could argue actually that temporary workers have greater workplace safety protections under the law than their counterparts with clients.”

Bureau of Labor Statistics numbers say contingent workers’ injuries are declining. Yet, new evidence suggests these injuries are undercounted.

In a BLS-funded project completed last summer, officials with the Washington State Department of Labor and Industries interviewed 53 employers who had used temp workers. Only one-third said they would enter a temp worker injury in their OSHA log, as the law requires. The others said they wouldn’t or claimed ignorance. “A lot of them just didn’t know” the rules, said Dr. David Bonauto, the department’s associate medical director.

Dwyer, of the staffing association, said the problem in Washington appears to be isolated.

“I’m not sure it’s actually a widespread problem,” he said. “The laws are very clear about this — that whoever controls the worksite is responsible for recording temporary workers’ injuries on the (OSHA log) and typically that’s the client.”

The executive director of the Chicago Workers’ Collaborative, which advocates for temp workers, says OSHA should target employers known to make heavy use of staffing agencies.

“The rise of the staffing industry is partially to give companies a greater distance from regulation,” said Leone José Bicchieri. “OSHA needs to come up with different approaches for this rapidly growing sector” — meeting with temp workers offsite, for example, so they’re not intimidated by supervisors.

Temp workers are often reluctant to report injuries because they are so easily replaced, Bicchieri said.

“They have no power to speak up,” he said. “The whole temp industry was created so the client company has less liability. We need to put workplace injuries back on the plate of the client company.”

But Dwyer, the American Staffing Association’s lawyer, denied that the temp workers have no recourse.

“Both the staffing firm and the client have joint obligations, as joint employers, to ensure the workplace safety of temporary employees, meaning that if something goes wrong, temporary employees have recourse, typically against the client and the staffing firm, if one or both fails to discharge their duty under the law,” he said.

He also cautioned against an OSHA crackdown on temp agencies. “To the extent that efforts become heavy-handed, there can be a disincentive, then, to using temporary workers,” Dwyer said, to the detriment of the workers, client employers and “the overall economy.”

In a statement, OSHA said it “feels strongly that temporary or contingent workers must be protected. They often work in low wage jobs with many job hazards — and employers must provide these workers with a safe workplace.”

The agency said it has brought a number of recent enforcement actions against employers for accidents involving temp workers.

Weak law, few prosecutions

Although the Galassi memo recommends criminal action in the Centeno case, employers in America are rarely prosecuted for worker deaths.

The Occupational Safety and Health Act of 1970 is exceptionally weak when it comes to criminal penalties. An employer found to have committed flagrant violations that led to a worker’s death faces, at worst, a misdemeanor punishable by six months in jail.

By comparison, a violation of the Endangered Species Act carries a maximum sentence of one year.

“It should not be the case that a facility that commits willful violations of the worker safety laws faces only misdemeanor charges when a worker dies because of those violations,” said David Uhlmann, a law professor at the University of Michigan and former chief of the Justice Department’s Environmental Crimes Section.

“The company involved as well as any responsible corporate officials should face felony charges that carry significant financial penalties for the company and the possibility of lengthy jail terms for the individuals,” Uhlmann said. “Anything less sends a terrible message about how we value the lives of American workers.”

Federal prosecutors are generally unenthusiastic about worker cases, said Jordan Barab, second-in-command at OSHA. The Justice Department “often says, ‘You know, we’re not going to spend all these resources just to prosecute a misdemeanor,’ ” Barab said.

At Justice, Uhlmann made creative use of environmental statutes to get around the OSH Act. In one case, a worker at an Idaho fertilizer plant named Scott Dominguez nearly died after being sent into a steel storage tank containing cyanide-rich sludge. Dominguez had been ordered into the 25,000-gallon tank without protective equipment by the plant’s owner, Allan Elias, who had refused to test the atmosphere inside the vessel.

Dominguez collapsed and sustained brain damage from the cyanide exposure. Prosecutors charged Elias with three felony counts under environmental laws, including the Resource Conservation and Recovery Act, which governs the handling and disposal of hazardous waste.

Because Elias had fabricated a confined-space entry permit indicating it was safe for workers to enter the tank, he also was charged with one count under a section of Title 18 of the U.S. Code, for making a false statement to, or otherwise conspiring to defraud, government regulators.

After a jury trial in 1999, Elias was convicted on all counts and sentenced to 17 years in prison.

Environmental statutes don’t always apply in worker death or injury cases. The accident that mortally wounded Carlos Centeno, for example, appears not to have involved hazardous waste, or air or water pollution.

Charges under Title 18 remain a possibility, Uhlmann said. Nonetheless, he said, the OSH Act needs revision. Congress came close to adding felony provisions to the law in 2010 but failed amid pushback from the business community.

“Accidents are not criminal,” Uhlmann said. “What are criminal are egregious violations of the worker safety laws that result in not just deaths but serious injuries.”

Sen. Tom Harkin, an Iowa Democrat who chairs the Senate Health, Education, Labor and Pensions Committee, is a co-sponsor of the Protecting America’s Workers Act, which would enhance criminal and civil penalties for OSHA violations.

“In every other walk of life, if a person engages in willful conduct that results in someone else’s death, we throw the book at them,” Harkin said in a statement. “But if someone dies on the job, the rules are different. Even intentional lawbreaking that kills a worker brings no more than a slap on the wrist.”

Whether a bulked-up worker-protection law would have improved conditions at the Raani Corp. is a matter of speculation. According to Thomas Galassi’s memo, the accident that ultimately killed Carlos Centeno merited only a one-line entry in the company’s files, stating that an internal committee would investigate.

During the inspection after Centeno’s death, a newly hired Raani manager asked OSHA officials to help him convince his superiors to train and provide safety gear to workers, Galassi wrote. The manager had concluded that those above him had “no respect for the hazards of the chemicals on site or human life,” the memo says.

This story was jointly reported by WBEZ, the public radio station of Chicago, and the Center for Public Integrity, a nonprofit investigative news outlet in Washington, D.C. Jim Morris and Chip Mitchell, reporters.

 

#India- #Abbott suspends giving gifts to doctors #goodnews #medicalethics


 

 

 

 

By Frederik Joelving

 

NEW YORK | Tue Oct 16, 2012 6:03pm EDT

 

(Reuters Health) – Abbott Laboratories Inc has instructed its sales representatives in India not to give gifts to doctors, who are prohibited by local law from accepting them, a practice that has been used as a bargaining chip by companies wanting a piece of the country’s burgeoning healthcare market.

 

According to an internal email dated October 11 from Sudarshan Jain, managing director of Abbott Healthcare Pvt. Ltd, the gift-giving has been temporarily suspended.

 

“Only Abbott-approved clinical/scientific literature may be distributed to current and potential customers,” said the email, which was reviewed by Reuters on Tuesday. “No brand reminders or therapy reminders in your possession should be given to any current and potential customer and no further brand reminders or therapy reminders should be ordered.”

 

Accepting gifts or travel arrangements from drugmakers is against the law in India, but enforcement is inconsistent.

 

Public health experts say gift-giving leads to dangerous overprescribing and unnecessary use of expensive medications when cheaper versions are available. That can be a significant burden for the 400 million people in India who live on less than $1.25 a day.

 

A sales representative with Abbott Healthcare told Reuters that therapy reminders are low-value items such as pens, whereas brand reminders refer to electrical appliances and other pricier merchandise.

 

The representative, who spoke on condition of anonymity, said he was not worried about his job getting harder without the gifts, but, he quipped, it would certainly make his bag lighter.

 

As multinational drug companies ramp up investments in emerging markets to realize billions of dollars in annual sales, they have faced increased scrutiny from the United States and European governments. U.S. authorities are currently probing a number of leading global drugmakers for kickbacks and bribery overseas.

 

A Reuters investigation in September showed Abbott’s Indian subsidiaries plied doctors with scanners, vacuum cleaners, coffee makers and similar items in return for prescribing the company’s drugs to patients. Sales representatives were shown lists of gifts in strategy guides issued by the company.

 

In August, Pfizer Inc paid $60.2 million to settle a U.S. probe involving illegal payments to win business overseas, including kickbacks such as cellphones and tea sets given to doctors in China. Last year, Johnson & Johnson agreed to pay $70 million to settle U.S. charges under the Foreign Corrupt Practices Act (FCPA) that it had bribed healthcare providers in Greece, Poland and Romania.

 

Scott Davies, a spokesman for Chicago-based Abbott Labs, confirmed the decision but declined to say what had prompted the move. He said he was not aware of any inquiries from regulators about the company’s dealings in India.

 

“This is an internal action,” he told Reuters. “We are suspending that brand reminder program while we review it.”

 

Davies said the suspension encompasses Abbott Healthcare and Abbott True Care, but did not have information on whether other Indian subsidiaries would continue the practice. He declined to address travel payments.

 

(Editing by Ivan Oransky, Michele Gershberg, Maureen Bavdek and Claudia Parsons)

 

 

Radiating Death: How #Walmart Displaces Nearby Small Businesses


 

 

Radiating Death: How Walmart Displaces Nearby Small BusinessesReuters

In 2006, months before a Walmart store was opened in the Austin neighborhood of Chicago’s West side, researchers counted 306 businesses in the surrounding area. Two years after the Walmart opened, 82 of those businesses had closed.

That some businesses, particularly small businesses, would close after a large retailer moves into the neighborhood is to be expected. But, as the researchers found, the pattern and severity of those closures was far from typical. The closer a business was to the new Walmart store, the more likely it was to close.

“No matter which direction you go from Walmart, there’s a very high rate of business closures in the immediate vicinity, and the further away you get there’s less and less,” says University of Illinois Chicago economics professor Joe Persky, one of the authors of the study, which wasjust published in Economic Development Quarterly.

Farther out from the store, about four miles or so, the rate of closure is about average, or roughly 24 percent of small businesses, according to Persky. “Small businesses often close. They have a high turnover.”

But the closer a store was to the Walmart location, the greater the likelihood it would close. Persky and his colleagues found that for every mile closer to the Walmart, 6 percent more stores closed. Close in around the store’s location, between 35 and 60 percent of stores closed.

And depending on the type of business, the impact of a Walmart moving in can be much worse. Persky says that the per-mile closure rate increase for drugstores is almost 20 percent. For home furnishings, it’s about 15 percent. For hardware stores, it’s about 18 percent per mile. For toys, it’s more than 25 percent per mile.

The research also shows that during the study period, from 2006 to 2008, overall sales tax revenues went down in the two ZIP codes closest to or encompassing the Walmart. Before the store opened, the sales tax revenues for these two ZIP codes were growing at rates of 6.7 percent and 4.3 percent per year. After the Walmart opened, they each saw a boost – up to nearly 18 percent in the ZIP containing the Walmart and slightly up to about 5 percent in the ZIP next door. But by 2008, both of those growth bumps had faded, and the ZIPs were seeing declines – negative 11 percent sales tax revenue growth in the ZIP containing the Walmart and negative 3 percent in the neighboring ZIP. The researchers also argue that by 2008, the amount of jobs lost because of store closures was just about the same as those created by the Walmart store’s opening. It was, Persky says, a wash.

“You may have reasons to want Walmart and you may have reasons not to want Walmart, but economic development is not one of those reasons,” Persky says. “And yet that’s been, in many cases, the primary argument for bringing Walmart to the city.”

Walmart disputes these findings and argues that its stores are magnets for both growth and economic development. In a study commissioned by the company, an independent researcher argued that the assertion of jobs creation being “a wash” was incorrect and only looked at jobs created by Walmart and not other jobs that also developed after the store opened. That study[PDF] found there was actually a net increase of more than 400 jobs in the area.

“Anyone who has actually walked the neighborhoods on the west side, talked with elected officials there or met with surrounding area businesses, knows the positive economic impact our store has had on the surrounding area,” says Walmart spokesperson Steven Restivo. “The businesses that typically surround our stores either offer a product or service we don’t or are strong in areas we’re not. Just drive around the vicinity of a Walmart and you’re likely to see small, medium and large businesses co-existing.”

Persky says he understands some of the criticism of his research. He concedes that the study did not include any data on stores that opened during the 2006 to 2008 period, just those that closed. But he argues that any openings would have been reflected in the sales tax revenue data collected.

Persky argues his study offers proof that Walmart openings can be bad for small business, especially those located close to the new stores. And while he says the results shouldn’t be used as an argument for or against the retailer, he does call into question Walmart’s role in local economic development.

Photo credit: John Gress / Reuters

Keywords: Chicagoeconomic developmentWalmartChicagoSmall Business
Nate Berg is staff writer at The Atlantic Cities. He lives in Los Angele

 

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