New story in Business from Time: The Overstock CEO Resigned Claiming ‘Deep State’ Conspiracy and a Relationship With a Russian Spy. Here’s What to Know

The CEO of online home goods seller Overstock resigned Thursday, following comments alleging that the FBI had directed him to pursue an intimate relationship with the convicted Russian agent Maria Butina as an informant.

Patrick Byrne, 57, had on Aug. 12 issued a bizarre statement through Overstock criticizing the FBI, referring to a “deep state,” “men in black,” and “political espionage conducted against Hillary Clinton and Donald Trump,” after he said he consulted with billionaire Warren Buffet.

A rambling, incendiary interview on CNN Thursday night in which he made numerous unsubstantiated claims has only raised further questions.

The FBI has refused to comment on Byrne’s claims.

Overstock shares fell by some 40% in the wake of Byrne’s disclosures, and ten days later he resigned. “While I believe that I did what was necessary for the good of the country,” he wrote in his resignation letter Thursday, “for the good of the firm, I am in the sad position of having to sever ties with Overstock.”

In a statement, Overstock said: “The company thanks Dr. Byrne for his vision and leadership over the past 20 years as he took Overstock from a fax-based liquidator to one of the most influential technology companies of our time. The board and leadership will continue to build on Dr. Byrne’s legacy while executing on our strategy with clear focus.”

Here’s what to know about Byrne’s allegations about Butina, the “deep state,” and the Mueller investigation.

Who is Patrick Byrne?

Byrne was an early investor in internet commerce, buying Overstock in 1999 and developing it into a multi-million-dollar business, despite the growth of competitors like Amazon.

But he has also cultivated a career as a provocateur. Alongside business, Byrne runs a conspiracy-tinged website,, on which he has alleged a variety of claims, including that a so-called “Sith Lord” in Wall Street (a reference to a Star Wars villain) was leading a conspiracy against his company. Byrne and the site were found liable for defamation in 2016 related to separate allegations made on the site against a Canadian man, Altaf Nazerali, and ordered to pay nearly $1 million dollars.

Recently Byrne has become an advocate of blockchain and Bitcoin, spending millions on projects related to the cryptocurrency. Shares of Overstock rose sharply in line with Bitcoin in late 2017 and early 2018, before collapsing with the cryptocurrency.

A message to Overstock seeking additional comment was not immediately answered.

What has he said about Maria Butina and the FBI?

Byrne’s comments on the issue have been rambling, and at times incoherent and vague.

After his resignation, Byrne issued further incendiary comments, claiming in an interview with CNN that former FBI director James Comey knew “100%” about him being instructed to conduct a relationship with Butina, and that “the [FBI] was hijacked from the top.” Comey, in a statement to CNN, called Byrne’s claims “ridiculous.” “The FBI doesn’t work that way,” Comey added.

Byrne has said Butina approached him and offered to introduce him to Russian officials and oligarchs, and that she asked to be put in touch with members of the Clinton, Ted Cruz and Marco Rubio presidential campaigns in 2016.

Butina, 30, pleaded guilty in December 2018 to acting as an unregistered foreign agent of the Russian state. Prosecutors alleged she attempted to meet members of presidential campaigns in the runup to the 2016 election, and had worked alongside the National Rifle Association (NRA) to support Second Amendment causes. Byrne said that he and Butina first began a sexual relationship in 2015 after meeting at a libertarian conference, and shortly afterward he began cooperating with the FBI.


New story in Business from Time: David Koch’s Millions Remade the Republican Party. He Didn’t Like the Results

David Koch towered over most rooms, both physically and politically. He liked it that way.

At 6 feet, 5 inches tall, the professional contrarian and ideological warrior had little interest in blending in. Even as Democrats made him and his deep political giving a symbol of the corrupting influence of money on politics, he remained defiant and doubled-down. Koch could not be kowtowed into a crouch.

David Koch’s death was announced Friday. No cause was given, although his brother Charles noted in a statement that David had previously fought prostate cancer. He was 79.

In his youth, he resisted his wealthy family’s headquarters in Wichita, Kansas, and instead set up his own wing of the business in New York City. While his brother Charles Koch read economics at home in the heartland, David Koch entertained models at his Manhattan penthouse and became one of New York’s most generous patrons. As the 1970s came to their sputtering end, Koch stepped into politics for the only campaign of his life, buying his way onto the Libertarian Party’s ticket as its vice presidential nominee, attracting almost a million votes nationwide in a race that saw Ronald Reagan win the presidency.

When Bill Koch challenged sibling Charles’ spending on libertarian causes and staged a failed boardroom coup, David and Charles began a bitter and years-long battle against two other siblings to wrest control of the vast Koch Industries out of their hands. And as the nascent Tea Party movement started stirring in the late 2000s, it was David Koch who saw the potential to use his family’s already formidable network of deep-pocketed allies to tap into the nation’s frustrations through groups like Americans for Prosperity. In doing so, Koch became perhaps the most prominent and vilified symbol of the billionaires who have turned 21st century politics into a playground of the privileged.

Few individuals have enjoyed more of an influence of American politics than Koch, even though he never held public office in his life. He was a hard-edged ideologue who took once-fringe ideas of his father’s John Birch Society to the mainstream by dint of his checkbook and cold-eyed disdain of what he saw as limits to freedom. His critics say he and his family’s network of donors and groups coarsened politics during Barack Obama’s presidency to the point that rabble-rouser Donald Trump was able to win the Republican Party’s nomination in 2016, despite the fact both David and Charles both found Trump personally and politically abhorrent. Koch’s defenders note that he risked his reputation and privacy to become one of the most pilloried figures of an era to advance the causes he held dear.

Businessman David Koch arrives at the Metropolitan Museum of Art
Lucas Jackson—ReutersBusinessman David Koch arrives at the Metropolitan Museum of Art Costume Institute Gala 2015 in New York.

Like all giants in a society, his legacy is unwieldy and full of contradictions that defy a simple reading. As a 42% stakeholder in the second largest privately held company in the country, Koch was said to have a net worth of around $50 billion, making him the 11th-richest person on the planet, according to Forbes’ billionaire index. But unlike others in his ranks, Koch had one of the freest wallets for charities of his choosing: his lifetime philanthropic giving topped $1 billion to causes such as the Smithsonian, Lincoln Center and cancer research. He patronized groups that preached civility even as he nudged his political arm to portray Obama as an existential threat to American capitalism. Such complications only made Koch that much more of an enigma, a role he hardly minded.

David Hamilton Koch was born in 1940, the son of a tough industrialist father who pitted his sons against each other to toughen them up. Their caretaker on the family ranch knew Koch’s temper so well that he kept leather boxing gloves at the ready for David and his twin brother, Bill, to settle disputes. Educated in chemical engineering at the Massachusetts Institute of Technology and a standout basketball star there, he would settle in New York and set up his own division, Koch Engineering, securing four patents. Whereas his brother, Charles, would be the strategic face of the company as its chairman and CEO, David would stay in New York as a man-about-town and the parent company’s executive vice president.

Koch was as, at his best, an affable elite who preferred dinners at his Manhattan homes, telling what today would be called “dad jokes”––even though he didn’t marry until he was age 56. He enjoyed the ballet and art, so much so that the New York City Ballet’s home and the plaza in front of New York’s Metropolitan Museum of Art both carry his name. A devoted free-market evangelist, he nonetheless kept tabs on his money; he wanted detailed reports on spending, demanded receipts and didn’t always pick up the dinner check. He also found government regulations overly restrictive and counter-productive, whether he was deriding environmental rules or bans of prostitution. He called them, during his 1980 run for vice president, “victimless-crime laws.”

But he also could be a reliable contrarian and bitter enemy. It was during that 1980 campaign that he showed a true disdain for the status quo because he could. He took advantage of a Federal Election Commission loophole that allowed candidates themselves to donate unlimited cash to campaigns and causes. When he pledged hundreds of thousands of dollars to the Libertarian Party’s ticket, he earned himself a spot on it, despite some activists’ questions about whether Koch was the best fit. He didn’t run to win. He ran to evangelize libertarian ideology.

At that very moment, David was still working diligently as Charles’ lieutenant, fending off a family clash over the business. Bill, David’s twin, had been raising concerns about Charles’ management, and he had his reasons. Koch Industries clashed with government officials at the Department of Labor, Department of Energy, the Internal Revenue Service, the Justice Department and the Bureau of Land Management. Criminal investigations were ongoing and some family members found Charles’ “market-based management” to be too clinical and autocratic. David sided with his brother, who was growing the company at remarkable rates. Years of infighting followed. Eventually, Bill and the fourth brother, Frederick, were excommunicated from the family business, sent away with $1.1 billion. They sued, but in 1998, a jury found they had not, in fact, been swindled. Three years later, David, Bill and Charles reconciled — and signed a private settlement, the terms of which are still secret.

David Koch arrives at the Metropolitan Museum of Art
Carlo Allegri—ReutersBusinessman David Koch arrives at the Metropolitan Museum of Art Costume Institute Gala Benefit in New York on May 5, 2014.

David Koch never lost his political zeal, though. In Washington, he saw the profligate spending under President George W. Bush just as bad as over-regulation under President Bill Clinton, whose administration in the fall of 2000 unleashed a 97-count indictment of Koch Industries and its employees for environmental violations. (The company pleaded guilty to one count and paid a $20 million fine.) Koch thought Bush’s war in Iraq as misguided, but kept his counsel private lest he surrender his own privacy. He thought the deficit spending would lead to ruin.

But when Obama won the White House, David and Charles sprang to action. Over the years, they had amassed a network of libertarian donors who would also write checks to think tanks and universities that were working on Koch-aligned priorities. What if they could use that research, tap into the nascent Tea Party and build an army of grassroots activists to stop Obama?

They tested their theory. It worked. Obama’s fellow Democrats lost 63 seats in the House, Republicans’ best showing there since 1938. It cost the Koch network its privacy and millions, but it was worth it, David Koch felt, because he now had a check on Obama, and maybe a way out of his health care law. The partnership with the Tea Party-style activists wasn’t a neat fit ideologically, but it was part of a bigger pursuit that allowed Koch to have a greater sway in politics than he ever previously enjoyed. When someone from a Koch-aligned group called, lawmakers listened.

Koch loyalists then went about laying the groundwork for 2012. They went all-in on nominee Mitt Romney, a former Massachusetts governor and fellow capitalist evangelist. Romney, of course, lost. Koch strategists to this day have deep regrets about that choice and still can cite what they see as strategic errors from the campaign. Their total outlay for all activities, including social causes for the 2012 cycle? A cool $400 million.

David and Charles Koch in 2015 started down the pathway of picking a favorite for 2016. They told reporters they had prepared a total budget of $899 million to spend on politics and policy for the two-year election cycle but ultimately held fire after several contenders made the pilgrimage to meet with the brothers and their partners. When Trump won the nomination, it was official: they’d be working on state and local races, as well as killing projects like mass transit, which they argue is “a boondoggle.” Trump was not an ideological fit by any stretch and his style rubbed even the showiest of the Koch the wrong way. Trump, for his part, taunted them from afar.

At the same time, there was a sense inside the Koch orbit that pure, partisan politics was sliding from atop the list, despite a $400 million budget for the November 2018 elections. The Koch orbit worked against the White House on its hardline immigration plans and its ban on Muslims, and with it on tax cuts and a rewrite of the criminal justice laws. They anticipated early that 2018 would be brutal for Republicans.

David Koch stepped away from the company and from the political wing in 2018, Charles Koch announced in a memo to employees. David Koch had skipped recent political summits and a retirement had been in the offing. A non-specific health issue was to blame. All the while, politics continued to fade from the first items on the agendas distributed at donor summits.

The company David Koch leaves behind has more than 100,000 employees working in 60 countries, with revenues north of $100 billion. Perhaps more than that, though, is his network of likeminded patrons and its outsized potential to shape political forces. At its height, the Koch network had an almost billion-dollar footprint in the conservative movement, on par with the formal Republican Party. It’s not an exaggeration to say that Koch remade a large part of the GOP, even if its current leader is not of his style. But that’s the thing about revolutions: once begun, they’re tough to control.

New story in Business from Time: Fed Chairman Says U.S. Economy Is Favorable, But Faces ‘Significant Risks’ Amid Trade Uncertainty

(Bloomberg) –– Federal Reserve Chairman Jerome Powell said the U.S. economy is in a favorable place but faces “significant risks” as growth abroad slows amid trade uncertainty.

“Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Powell said in the text of his remarks Friday to central bankers gathered at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming. “We will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2% objective.”

U.S. stocks pared losses and Treasuries climbed after Powell’s remarks as investors took them as leaving the door open to another rate cut when the Fed meets next month.

Citing slowing global growth and muted inflation, the Fed cut interest rates last month for the first time in more than a decade, reducing its target range by a quarter-percentage point to 2%-2.25%. Powell described the rate reduction at the time as “a mid-cycle adjustment to policy,’’ telling reporters on July 31 that it wasn’t the beginning of a long series of cuts.

But in his remarks Friday, he noted that events since that meeting “have been eventful.”

“We have seen further evidence of a global slowdown, notably in Germany and China. Geopolitical events have been much in the news, including the growing possibility of a hard Brexit, rising tensions in Hong Kong, and the dissolution of the Italian government,” Powell said, also mentioning another salvo in President Donald Trump’s trade war with China, which was matched by new countermeasures by that nation earlier Friday.

“In principle, anything that affects the outlook for employment and inflation could also affect the appropriate stance of monetary policy, and that could include uncertainty about trade policy,” Powell said. “There are, however, no recent precedents to guide any policy response to the current situation.”

Investors have fully priced in another quarter point reduction when the Federal Open Market Committee meets on Sept. 17-18, according to federal funds futures contracts. Powell’s remarks suggest the committee remains in heightened risk-management mode.

“We are carefully watching developments as we assess their implications for the U.S. outlook and the path of monetary policy,” he said.

Powell’s remarks examined U.S. monetary policy since World War II. He broke the analysis into three long-run questions: Can the central bank restrain inflation? Can the central bank buffer inevitable financial excess? Can the central bank still provide stimulus and counter-cyclical policy in a time of very low interest rates?

He answered the first two positively, saying that the Fed has the tools to quell inflation, while the post-crisis financial system is more resilient and monitoring has improved. Answers on the third question are a work in progress, he said.

“Our economy is now in a favorable place, and I will describe how we are working to sustain these conditions in the face of significant risks we have been monitoring,” he said.

New story in Business from Time: Multi-Billionaire David Koch, Who Spent Millions Supporting Conservative Policies, Dies at 79

David Koch, the industrialist and libertarian who used his fortune to transform American politics while also donating more than $1 billion to philanthropic causes, has died. He was 79.

The death was confirmed by Koch’s spokeswoman Cristyne Nicholas.

Koch, whose net worth of about $59 billion in the Bloomberg Billionaires Index tied him with his brother as the world’s seventh-richest person, derived most of his wealth from a 42% stake in Wichita, Kansas-based Koch Industries, which has annual revenue of about $110 billion. It is one of the nation’s largest closely held companies, and its spectacular growth included the 2005 acquisition of Georgia Pacific for $21 billion.

He and his brother Charles, 83, became better known for pushing their views than for their business acumen, pumping millions into conservative causes and candidates. The operation they built includes more than 700 donors who give $100,000 or more a year and a group called Americans for Prosperity that has chapters in 36 states. It’s rivaled only by the Republican Party in its influence on the conservative agenda in the U.S.

New story in Business from Time: Think You Can Stay Sane On a 20-Hour Flight? This Airline Is Testing the Long-Haul Endurance Challenge

Qantas Airways will run marathon ghost flights from New York and London to Sydney carrying just a few staff to see how the human body holds up before commercial services start.

Qantas said Thursday it will simulate the world’s longest direct flights with Boeing Co. Dreamliners as soon as October. The payload of 40 passengers and crew, most of them employees, will undergo a host of medical checks and assessments.

The Australian airline wants to start direct flights connecting Sydney to New York and London as soon as 2022. Chief Executive Officer Alan Joyce describes the services as aviation’s final frontier.

The services, which take about 20 hours, aren’t yet a sure thing. Qantas still hasn’t decided on a Boeing or Airbus SE plane that can fly the route fully laden and without a break. And it’s not clear how passengers will tolerate living in the cabin for the best part of a day and night.

“The things we learn on these flights will be invaluable,” Joyce said on a call Thursday.

Joyce has previously said he plans to choose either Boeing’s 777-8X or Airbus’s ultra-long-range A350-900ULR and -1000ULR for the flights. Competition for the contract gives Qantas more leverage over price.

In an interview with Bloomberg Television on Thursday, Joyce said the delay to Boeing’s 777X program hasn’t excluded the U.S. manufacturer from the deal. He said Boeing had offered Qantas a “transitional” solution to accommodate for any delay. He didn’t elaborate.

“This is still a very competitive race,” he said.

New story in Business from Time: Low Wages, Sexual Harassment and Unreliable Tips. This Is Life in America’s Booming Service Industry

Published in partnership with The Fuller Project, a non-profit newsroom that reports on issues impacting women.

After an eight-hour shift on her feet, shuffling between a stuffy kitchen and the red vinyl booths of Broad Street Diner, Christina Munce is at a standstill in traffic. Still wearing the red polo shirt and black pants required for work at the diner in South Philadelphia, she’s arguing with her colleague Donna Klum. They carpool most days to spare Klum a two-hour commute on public transportation that involves three transfers.

“It’s not O.K. for people not to tip,” Munce says from the driver’s seat, the Philly skyline passing by. Klum believes that bad karma will catch up with non-tippers, but Munce, a single mother who relies on tips to live, doesn’t care much about their fate. “I have to make sure that my daughter has a roof over her head,” she says. The desire for cash over karma is understandable: Munce’s base pay is $2.83 an hour.

The decade-long economic expansion has been a boon to those at the top of the economic ladder. But it left millions of workers behind, particularly the 4.4 million workers who rely on tips to earn a living, fully two-thirds of them women. Even as wages have crept up–if slowly–in other sectors of the economy, the minimum wage for waitresses and other tipped workers hasn’t budged since 1991. Indeed, there is an entirely separate federal minimum wage for those who live on tips. It varies by state from as low as $2.13 (the federal tipped minimum wage) in 17 states including Texas, Nebraska and Virginia, up to $9.35 in Hawaii. In 36 states, the tipped minimum wage is under $5 an hour. Legally, employers are supposed to make up the difference when tips don’t get servers to the minimum wage, but some restaurants don’t track this closely and the law is rarely enforced.

Waitresses are emblematic of the type of job expected to grow most in the American economy in the next decade--low-wage service work with no guaranteed hours or income. Though high-paying service jobs have been growing quickly in recent months, middle-wage jobs are growing more slowly and could decline sharply in the event of a recession, says Mark Zandi, chief economist with Moody’s Analytics. Those who lose their jobs in a recession usually move down, not up, the pay scale. Jobs like personal-care aide (median annual wage $24,020), food-prep worker ($21,250) and waitstaff ($21,780) are among the fastest-growing occupations in America, according to the Bureau of Labor Statistics (BLS). They have much in common with the burgeoning gig economy, in which people turn to apps in the hope of getting shifts delivering food, driving passengers and cleaning houses.

Christina Munce waits tables at Broad Street Diner in Philadelphia, where she’s worked for more than eight years.
Sasha Arutyunova for TIMEChristina Munce waits tables at Broad Street Diner in Philadelphia, where she’s worked for more than eight years.

This “sometimes” work has put the stress of earning a weekly wage, paying for health insurance and saving for retirement squarely on the shoulders of workers. Munce is on food stamps and Medicaid, and many days doesn’t make it to the federal minimum wage of $7.25 an hour. One of her recent paychecks read $58.67 for 49 hours worked. Add in the $245 she took home in tips, and she made about $6.20 an hour. She wants to work 40-hour weeks, but some days the diner is slow and she gets sent home early. “I don’t drink, I don’t smoke, all I do is save money,” Munce says.

But these employers are hiring, and these jobs are becoming a fallback for people whose former jobs placed them solidly in the middle class. Food-service jobs have grown nearly 50% over the past two decades, to 12.2 million, according to the BLS. They are on track to surpass America’s manufacturing workforce, which, at 12.8 million, has fallen 25% over the same period.

n the kitchen at the Broad Street Diner in Philadelphia, waitress Christina Munce keeps her daughter’s photo next to her pad for taking orders.
Sasha Arutyunova for TIMEn the kitchen at the Broad Street Diner in Philadelphia, waitress Christina Munce keeps her daughter’s photo next to her pad for taking orders.

Markets have swung wildly in recent weeks on fears of a possible recession, which could speed up the nation’s continuing shift from one that makes things to one that serves things. The last recession, from 2007 to 2009, took a sharp toll on industries that make things in America, with construction and manufacturing each losing 1.9 million jobs in the five years after the recession began. In contrast, industries like health care and food service added hundreds of thousands of jobs in the same period.

If another recession starts, “the primary hit is going to generally be in sectors that don’t involve providing basic services to other people,” says Jacob Vigdor, an economist at the University of Washington. On Aug. 20, President Trump, while declaring the economy still strong, said the Administration is examining various options to bolster the economy. Still, whenever the next recession comes, more workers will have to turn to the booming service industry, where low wages and unstable hours are the norm.

Christina Munce didn’t plan to be a waitress. She was in school studying massage therapy when, at 21, she got pregnant, and started waiting tables to put away the cash she would need as a young mother. She doesn’t regret a thing–her daughter, now 11, is her whole world, her name tattooed in cursive on Munce’s forearm. Pictures of the two posing together dominate the otherwise blank walls of their government-subsidized two-bedroom apartment. But being a single parent has limited Munce’s job options, since she needs the flexibility to take care of her daughter.

Tipped workers have always been an underclass in America. The concept was popularized in 1865, when some formerly enslaved people found employment as waiters, barbers and porters; still seen as a servant class, they were hired to serve. Many employers refused to pay them, instead suggesting that patrons tip for their service. A 1966 law tried to bring some measure of security to these jobs, requiring employers to pay a small base wage that would bring tipped workers up to the federal minimum wage when combined with their tips. In 1991, the tipped minimum wage was equal to 50% of the value of the overall minimum wage, but it’s stayed at $2.13 since then, as the minimum wage has nearly doubled. In 1996, President Bill Clinton signed legislation that froze the wage for tipped workers at that amount. It hasn’t changed since.

The regular minimum wage has doubled in that time. If the tipped minimum wage had even risen with inflation since 1991, it would be $6 an hour, according to research from Sylvia Allegretto, co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley. Only 12 states currently pay waitstaff above that.

The serving workforce remains a microcosm of pay disparities in the broader economy. According to 2011–2013 data from the Economic Policy Institute, people of color make up nearly 40% of the workforce that falls under federal tipped-minimum-wage rules, which includes nail-salon workers and car-wash attendants. The flexibility of restaurant work is in part why more than a million single mothers are on the job. After eight years working at the 24-hour diner, Munce, 32, mostly gets the shifts that she wants–working breakfast and lunch and leaving by 3 p.m. when her daughter gets out of school–so for that, she’s grateful. When her daughter got bullied at school and Munce had to pick her up, Munce was able to get other waitresses to cover for her without getting in trouble for calling off work–though of course this also meant she didn’t get paid. When her daughter was younger and Munce couldn’t find anyone to watch her, she’d bring her daughter to the diner and have her sit quietly in a booth with crayons.

Half a century ago, people like Munce without a college education could expect to make a middle-class wage. But in recent years, as male-dominated manufacturing jobs have been outsourced or automated, women are contributing more to their families’ paychecks, and more of the 40% of Americans with no more than a high school education are being pushed into the service sector–as waitresses, domestic workers, hairdressers and Uber drivers.

Consumer spending on restaurants surpassed spending in grocery stores for the first time in 2015, and to support that, the BLS projects more than 500,000 food-serving job vacancies between 2016 and 2026, a higher number of openings than in all but three occupations it tracks.

“We’re not a sliver of the economy,” says Saru Jayaraman, co-founder of the Restaurant Opportunities Center, an advocacy organization pushing to eliminate the tipped minimum wage. “We’re increasingly the jobs that are available to every new entrant into the economy, including people being laid off from other sectors.”

Karen Baker, 52, one of Munce’s managers at Broad Street Diner, says she once made $90,000 a year as an assistant production manager in a plant that made plastic soda bottles. When the plant moved to Iowa, she didn’t want to uproot her family so she returned to the service industry. “That’s one good thing–if you can’t find a job anywhere else, you can always find a job waitressing,” she says.

This is true of many service jobs, says David Autor, an economist at MIT who studies the future of work. But as job seekers are flooding into those fields, they’re being met with low pay, few benefits and no raises as they age and gain more expertise. In 1980, 43% of workers without a college education were in middle-skill jobs; by 2016, that number had dropped to 29%, Autor says.

Two-thirds of tipped workers in America are women, and female waitstaff make less than men do.
Sasha Arutyunova for TIMETwo-thirds of tipped workers in America are women, and female waitstaff make less than men do.

A raise for tipped workers, then, could mean a raise for middle-class families across the country, says Heidi Shierholz, an economist at the left-leaning Economic Policy Institute who worked in the Department of Labor under President Obama. In the seven states where servers are paid the regular minimum wage for those states before tips, including Minnesota and Oregon, the poverty rate for waitstaff and bartenders is 11.1%, according to the Economic Policy Institute. Where there’s a separate tipped wage, the poverty rate among waitstaff is 18.5%.

Under Pennsylvania’s $2.83-an-hour tipped minimum wage, Baker’s colleague Debbie Aladean, 74, says she can’t retire because she has so little Social Security. Olivia Austin, a 30-year-old waitress in rural Pennsylvania, started driving across the border to a restaurant in New York, where there was a higher minimum wage, because she couldn’t save any money as a waitress in Pennsylvania. “Most of the people I worked with could barely pay their rent,” she says.

Of course, some do quite well in the restaurant industry–especially white men, who are more frequently employed by fine-dining establishments. According to the National Restaurant Association (NRA), a lobbying group that represents more than 500,000 restaurant businesses, the median hourly earnings of servers, including tips, actually ranges from $19 to $25 an hour. Asking owners to do away with tipping and pay workers a $15-an-hour set wage puts too much burden on business owners and could sink one of the economy’s strongest-growing sectors, they say.

“We need a commonsense approach to the minimum wage that reflects the economic realities of each region, because $15 in New York is not $15 in Alabama,” says Sean Kennedy, the executive vice president of public affairs for the NRA.

The owner of Broad Street Diner, Michael Petrogiannis, is supportive of raising wages. “If [the minimum wage] goes to $15 an hour, then we’ll go to $15 an hour, no problem. I support that,” he says. He leaves reporting tips up to the waitstaff, and his employees have not complained about being shorted. “We want them to make whatever they have to make.”

Because their pay is so unpredictable, the women at Broad Street Diner sometimes have to pull double or triple shifts when they’re short on cash.
Sasha Arutyunova for TIMEBecause their pay is so unpredictable, the women at Broad Street Diner sometimes have to pull double or triple shifts when they’re short on cash.

The strength of the service sector offers a sort of tenuous job security for waitresses, but it comes with few protections. Sexual harassment is rampant. The Equal Employment Opportunity Commission receives more complaints of sexual harassment from the restaurant industry–more than 10,000 from 1995 to 2016–than from any other industry. Many waitresses have come to expect it. On a shift in July, Munce chirped back at offhanded sexual comments as readily as she dished out nicknames to regulars. When a man called her “thick and delicious” on his way out the door, she replied, “I think you mean tiny and tasty,” without skipping a beat.

After 12 years of waitressing, Munce’s somewhat hardened to the disrespect, but for her, the fickleness of the work is a bigger problem when it affects her family’s well-being. Her daily income depends on whether people decide to brave the heat or snow to dine out the day she’s working. It depends on whether customers order the $5.29 breakfast special or the $16.99 New York sirloin strip with two eggs, and whether they leave 20% of their bill. It depends on how many other waitresses are working that day, all hungry for tables.

This lack of certainty is stressful for waitresses, but as more workers face this reality, it has implications for the broader American economy, which relies on consumer spending to drive growth. Munce has saved about $1,000 by putting aside every $5 bill she earns in tips, but she can’t seem to ever get ahead. During a recent shift, she was staring down a weekend where she’d need cash for a cake for her daughter’s 11th-birthday party, $650 for a new evaporator for her car and quarters for the laundry. She feels the weight of taking a day without tips, wondering whether she’ll have enough to pay for back-to-school season, or the money that finally allowed her to get an air conditioner for her apartment. “My mind is always calculating,” she says of each tip, good or bad. Though the women at the diner will chip in and pay for one another’s expenses in case of emergency–a car accident, a babysitter or even funeral costs–slow shifts mean they’ll have to lean more on the one free meal they get at work, or make another trip to the food bank, or dip into whatever cash they have stored away from a better week.

Because their pay is so unpredictable, the women at Broad Street Diner sometimes have to pull double or triple shifts when they’re short on cash. The day before Munce drove Klum home, Klum had worked her regular day shift, taken her 5-year-old daughter to a public splash park, and then gotten a call from her manager at 11 p.m. to come in for a night shift three hours later. Klum paid for a Lyft to the diner, since public transportation doesn’t run to her apartment after midnight, then worked a double shift, from 2 a.m. to 3 p.m. “The diner’s been slow, so I really needed it,” Klum says. But as bad as the money can be, it’s helpful to be able to go home with cash in hand. She still holds out for the chance of one big payday, obsessing over YouTube videos where women are left a $12,000 tip. But when Munce suggests that they would be better off getting a fair hourly wage rather than depending on tips, Klum balks. “I would never do this without tips,” she says.

Munce works eight-hour shifts at Broad Street Diner for $2.83 an hour; her tips are supposed to get her to $7.25 an hour, but they often don’t.
Sasha Arutyunova for TIMEMunce works eight-hour shifts at Broad Street Diner for $2.83 an hour; her tips are supposed to get her to $7.25 an hour, but they often don’t.

Restaurant owners say that the problem isn’t low wages, or even low tips–it’s that the federal government should enforce its requirement that waitresses make at least the minimum wage after tips. But the sheer number of restaurants in America–an estimated 650,000 and growing–makes that difficult.

“We could have spent all of our time on tipped-minimum-wage enforcement because the violations are so pervasive,” says David Weil, who was the head of the Wage and Hour Division in the Department of Labor under President Obama. Weil’s division did 5,000 investigations into the restaurant sector in his time in the department, but “we were just scratching the surface,” he says.

The Trump Administration last year revoked an Obama-era rule that would have increased enforcement on restaurants that make tipped employees spend more than 20% of their time on non-tipped work.

The federal government does help low-wage workers like waitresses in other ways–with food stamps, subsidized housing and health care. Some cities have raised their own tipped minimum wages; others have opened wage-and-hour enforcement offices, but investigations on behalf of tipped workers often remain a low priority. In Philadelphia, a branch of the Mayor’s Office of Labor looks into complaints of wage theft. But the city’s messaging suggests it devotes more staff and resources to its long-standing offices guaranteeing fair pay for construction and government workers; its department that enforces wage-theft complaints was formed in 2015 and has only four employees. The chief of staff of the Mayor’s Office of Labor, Manny Citron, who is responsible for enforcement, says that although he was “not a pro on what our labor law says,” he believed that people who didn’t earn $7.25 an hour with tips “could just be a bad waiter,” and he falsely asserted that state law guarantees only $2.83 an hour. Without any documentation showing that cash tips didn’t bring waitresses to the minimum wage, he says, it’s hard for his office to take any action.

In July, the House passed the Raise the Wage Act, which would phase out the tipped minimum wage nationwide by 2027, eventually bringing all low-wage workers to $15 an hour. “Every member of this institution should be fighting to put more money in the pockets of workers in their communities,” Speaker Nancy Pelosi said on the House floor when the bill was passed. In 2019 alone, at least 12 states as politically varied as Pennsylvania, North Carolina and Indiana introduced legislation to end the tipped minimum wage.

But the Raise the Wage Act has little chance of advancing in the GOP-controlled Senate. It has vocal opponents in the NRA and the Restaurant Workers of America (RWA), a group of servers who want to keep tipping. “It’s a system that works,” says Joshua Chaisson, a Maine waiter who is a co-founder of the RWA.

Restaurant owners say they aren’t the ones who should pay the price of America’s shift to a service economy. “Today, the middle class has been gutted, but [lawmakers] are trying to legislate entry-level low-skilled jobs into living-wage jobs where you can raise a family in New York, one of the most expensive places in the world,” says Andrew Riggie, executive director of the New York City Hospitality Alliance, which represents hotels and restaurants. “We can’t address all societal ills on the shoulders of small-business owners.”

Munce cuddles with her daughter in their apartment in southwest Philadelphia.
Sasha Arutyunova for TIMEMunce cuddles with her daughter in their apartment in southwest Philadelphia.

In the long, final days of summer, business at Broad Street Diner has been slow. Munce tries to stay positive. The customers and staff of Broad Street Diner are her family, more or less, and not just because her sister, Jeanne, is also a waitress there. Munce speaks fondly of one of her regulars, Bill, an elderly man who likes his toast dark as a hockey puck. “They’ve got the best girls in here, and I’ll tell ya, not one grouch,” Bill says to no audience in particular one day this summer.

For Munce, it all adds up: the freebies, the walkouts, the cops receiving a 50% discount, the mess-ups from the kitchen–each one a knock to her take-home pay. “I am a people person. But at the end of the day, your compliments and smiles are not enough,” she says during one of her shifts, a sheen of sweat on her forehead.

She hopes she can give her daughter a better life than she had growing up. Her dad served in Vietnam and her mom always scraped by on odd jobs, she says, but it’s harder to string together a living these days. She lives a couple of miles from where she grew up. Is she really doing better than they did? She tells her daughter that education is the most important thing, that she needs to get good grades, no matter what. “I say, ‘I just want you to be better than me,’” she says. Not that she’d steer her daughter away from waitressing, necessarily. If you’re a people person, Munce says, it can be fun to talk to strangers all day. Depending on them for tips, though, is something else.


This appears in the September 02, 2019 issue of TIME.

New story in Business from Time: Trump Acknowledges That His China Policies May Mean Economic Pain for the U.S.

(WASHINGTON) — President Donald Trump acknowledged Tuesday his aggressive China trade policies may mean economic pain for Americans but insisted they’re needed for more important long-term benefits. He contended he does not fear a recession but is nonetheless considering new tax cuts to promote growth.

Asked if his trade war with China could tip the country into recession, Trump brushed off the idea as “irrelevant” and said it was imperative to “take China on.”

“It’s about time, whether it’s good for our country or bad for our country short term,” he said.

Paraphrasing a reporter’s question, Trump said, “Your statement about, ‘Oh, will we fall into a recession for two months?’ OK? The fact is somebody had to take China on.”

The president indicated that he had no choice but to impose the tariffs that have been a drag on U.S. manufacturers, financial markets and, by some measures, American consumers.

Trump was clear that he didn’t think the nation is at risk of a recession and that a boom was possible if the Federal Reserve would slash its benchmark interest rate.

“We’re very far from a recession,” Trump said. “In fact, if the Fed would do its job, I think we’d have a tremendous spurt of growth, a tremendous spurt.”

Yet he also said he is considering a temporary payroll tax cut and indexing to inflation the federal taxes on profits made on investments — moves designed to stimulate faster growth. He downplayed any idea that these thoughts indicate a weakening economy , saying, “I’m looking at that all the time anyway.”

Asked about his remarks, White House spokesman Judd Deere said, “The president does not believe we are headed for a recession. The economy is strong because of his policies.”

Trump faces something of an inflection point on a U.S. economy that appears to be showing vulnerabilities after more than 10 years of growth. Factory output has fallen and consumer confidence has waned as he has ramped up his trade war with China. In private, Trump and his advisers have shown concern that a broader slowdown, if not an outright recession, could arrive just as he is seeking reelection based on his economic record.

Trump rattled the stock and bond markets this month when he announced plans to put a 10% tax on $300 billion worth of Chinese imports. The market reaction suggested a recession might be on the horizon and led Trump to delay some of the tariffs that were slated to begin in September, though 25% tariffs are already in place for $250 million in other Chinese goods.

The president has long maintained that the burden of the tariffs is falling solely on China, yet that message was undermined by his statements to reporters Tuesday prior to a meeting in the Oval Office with the president of Romania.

“My life would be a lot easier if I didn’t take China on. But I like doing it because I have to do it,” Trump said.

The world economy has been slowing in recent months, and recent stock market swings have added to concerns that the U.S. economy is not immune. A new survey Monday showed a big majority of economists expecting a downturn to hit by 2021.

Addressing that possibility, Trump focused anew on pressuring the Federal Reserve to cut interest rates. Presidents have generally avoided criticizing the Federal Reserve publicly, but Trump has shown no inclination to follow that lead. Rather, he’s positioning Fed Chairman Jerome Powell to take the fall if the economy swoons.

“I think that we actually are set for a tremendous surge of growth, if the Fed would do its job,” Trump said. “That’s a big if.”

Trump recommended a minimum cut of a full percentage point in the coming months.