Sunday, September 5, 2021

COVID Effects On Businesses

How The Pandemic Pushed Restaurant Workers Over The Edge

(By Eli Rosenberg, Washington Post, 24 May 2021)

 Jim Conway started working in restaurants in 1982, making $2.13 an hour, plus tips.  And though the world has changed significantly in the nearly 40 years since then, his hourly wage has not. At the Olive Garden outside of Pittsburgh where he worked when the pandemic hit last year, he was making $2.83 an hour, the minimum wage for tipped workers in Pennsylvania, plus tips. So after being furloughed for months last spring, Conway, 64, decided to retire.

Being paid the rough equivalent of a chocolate bar an hour from the chain was little incentive for him to stick it out longer in the industry after so many years, especially with tips no longer a reliable source of income and lingering health concerns about covid-19.  “The main issue for me was safety,” Conway said. “There are lots of people who don’t want to participate in the old ways.”

Conway is one of the millions of workers who left the restaurant industry during the pandemic and haven’t come back. The industry has 1.7 million fewer jobs filled than before the pandemic, despite posting almost a million job openings in March, along with hotels, and raising pay 3.6 percent, an average of 58 cents an hour, in the first three months of 2021.


Restaurant chains and industry groups say a shortage of workers like Conway is slowing their recovery, as the sector tries to get back on its feet amid sinking covid cases, falling restrictions and resurgent demand in many areas around the country.

The issue has quickly become political, with Republicans blaming the labor crunch on the Biden administration’s move to boost federal unemployment insurance supplement, which has been a central part of the government’s response to the pandemic for most of the past year. GOP leaders and business groups such as the U.S. Chamber of Commerce say the extra unemployment insurance is a disincentive for some workers to return to work.

In interviews with The Washington Post, 10 current and former workers expressed a wide range of reasons they are or were reluctant to return to work. Some, like Conway, have left the industry or changed careers, saying they felt like the industry was no longer worth the stress and volatility.  Others said jobs that didn’t pay enough for them to make ends meet no longer felt appropriate to them. Others left after disputes with managers — over issues around safety and pay — and other flash points that have emerged in the past year.

All described the pandemic as an awakening — realizing that long-held concerns about the industry were valid, and compounded by the new health concerns. And forced to stop working or look for other jobs early on in the pandemic, many realized they had other options.  “The staffing issue has actually a lot more to do with the conditions that the industry was in before covid and people not wanting to go back to that, knowing what they would be facing with a pandemic on top of it,” said Crystal Maher, 36, a restaurant worker in Austin, who’s become more active on the industry’s labor issues in the past year. “People are forgetting that restaurant workers have actually experienced decades of abuse and trauma. The pandemic is just the final straw.”

Tonya Breslow, the owner of Mis en Place, a restaurant staffing firm, said a huge number of restaurants she works with are dealing with shortages.  The firm recently surveyed 2,000 line cooks and back-of-the-house restaurant workers nationally and found just over a quarter, 26 percent, reported leaving the industry, while 41 percent of workers said they were still employed in the industry. That left about a third of respondents who had not gone back to work.  Of that group, most workers said they were not yet back, because they were either looking for the right opportunity, they had concerns about safety during the pandemic, or they did not plan to return to the industry.

A turbulent industry

The restaurant industry is famously volatile, home to strong personalities, tense workplaces, grinding hours and unpredictable scheduling. Issues like tip and wage theft, sexual harassment, and drug and alcohol abuse can be widespread, and there is often little in the way of formal job benefits such as health care, vacation time, sick pay or a livable minimum wage, though many workers do well in tips during flush times.

Turnover is a way of life; the average job tenure for hourly food service workers is less than two months, according to data compiled by Mis en Place.  This constant churn was affecting Jazz Salm’s life even before the pandemic.  The 37-year-old had worked for Carrabba’s Italian Grill, a Florida-headquartered chain, at different locations for more than 15 years, but said she had to find another job after one of the restaurants’ outposts, near Miami, burned down.  She got a job at a Chili’s in that area in early March of last year, but was furloughed when the pandemic shuttered the business after her first week.

It took her months to get approved for unemployment insurance in Florida, as the state’s system struggled to process the flood of applications in the early months of the crisis.  By the end of summer, Salm found a job at a Walmart, after moving back in with her mother in Sarasota. But shortly after starting work there, she registered a fever during the screening the store administered to workers before they clocked in, and was sent home to quarantine. The company required a two-week, quarantine, she said, even though she had tested negative days a few days before developing the fever.

Walmart pays employees if they’re sent home for failing a health screening, but Salm said she was unaware of the benefit, and thought she’d have to go two weeks without a paycheck.  She decided to quit the job and drive up the coast to go stay with a friend who had invited her to come live at her house in Upstate New York. She slept in her car along the way.  She said she tried to find a job at a restaurant but couldn’t. So she started taking care of her friend’s 81-year-old father-in-law, who had just returned from the hospital after receiving chemotherapy for throat cancer. The money takes care of her rent, groceries and some spending money.

She said she may return eventually to the food service industry in Florida, where restaurant owners have complained vociferously about the worker shortage, but it will take her time. She won’t be fully vaccinated until mid-June, for starters. And she wonders about getting trained and going into medical caregiving full time.  “I’m trying to trust the process and hope that this all works out and there’s not another spike or anything else,” she said. “The restaurant industry really doesn’t guarantee the money that I used to make, with this pandemic. Because if it flares up again, or God forbid something happens in the restaurant, you have to close it down, you’re out of work for weeks and there’s nothing you can do to make money. Other than find another job.”

Losing the city’s best

Allan Creasy, 39, had worked in restaurants and bars for more than two decades, most recently as a bartender at Celtic Crossing, an Irish bar in Memphis, where he was voted the city’s best bartender three times over the years by readers of the city’s alt-weekly newspaper, the Memphis Flyer.  Like others, Creasy said the pandemic proved to be the tipping point for him, exacerbating long-standing labor issues in the industry and drawing attention to how low his wages were: $2.13 an hour before tips — the minimum wage for tipped positions in Tennessee and at the federal level. 

After three months back at the bar after the initial lockdown, Creasy decided to quit and pursue a career change.  “I didn’t come back to the same job I left previously,” he said. “It was very difficult to constantly have to police people about mask-wearing. It was very difficult to try to bartend and run out to the back parking lot to deliver to-go food, and to deal with Uber Eats drivers and the like, while making significantly less money than I’d been making previously.”

And the pay had gotten worse — with his income dropping from about $60,000 a year around 2011 to less than $40,000 before the pandemic, he said.  “I’ve seen the number of people who are passionate about the restaurant industry slowly ebb away over the last 20 years,” he said. “In my opinion, it’s because the server’s minimum wage hasn’t changed. There is this belief that servers and bartenders are interchangeable.”  Creasy, who has a bachelor’s degree in history, has been doing fundraising and social media work for a local political action committee since. He’s making about the same amount of money he did at the bar but doing something that feels closer to his heart with less risk.  “You had so many folks working in the industry because they loved it, but now so many folks found a job in a warehouse making $15 an hour, or making as much money driving for Uber Eats, all these different businesses,” he said. “It’s not that we’re on unemployment. We did our unemployment stint, and we found something else.”

Nathaniel Santiago, 20, who works at a McDonald’s in the Fort Lauderdale area in Florida, said he believes the industry’s low wages are playing a role.  He had to move back in with his parents last year after losing his job at a manufacturing facility, before finding work at the fast-food chain, where he said he’s making $11 an hour — just $1,760 per month for full-time work, with no health care. That’s about $4 an hour below what is estimated to be a living wage for a single person with no children in that area — the minimum amount calculated for a person to be able to meet basic standards of living.

He also believes unemployment insurance is playing a role in the shortage, saying he’s heard from some friends and family members who say they are happy getting by with support from the government in the meantime.  “We need to pay workers $15 an hour at the moment,” he said. “People want to talk about inflation or that if you pay everybody $15 an hour, everything is going to get more expensive, but it already is. Food, clothing, gasoline, rent — you name it.”  Peter DeQuattro, 36, a line cook in Memphis who recently left a job because it paid less than $15 an hour, said he thinks the pandemic has changed the paradigm for low-wage workers — giving people more confidence to demand better wages.  “There is a growing movement of people, including myself, that just flat out refuse to work for somebody that isn’t willing to pay a living wage,” he said.

Companies dangle bonuses, incentives, appetizers

There are signs that businesses are reacting to the shortage.  Companies that pay less than $15 an hour — the amount many liberal economists and labor advocates say should be a baseline to provide people with something closer to a living wage in many areas of the country — are increasingly dangling incentives, bonuses and pay raises in front of workers in the hopes of staffing up. Pay is increasing in the industry as well: The median wage for nonmanagement restaurant and bar workers rose 70 cents an hour, to $14.50, in the past three months — a significant 5.1 percent jump.

Costco, Chipotle and McDonald’s are among the publicly traded companies that have announced wage increases in recent weeks, and others, like Target, raised their wages in 2020 as the pandemic drew more attention to the plight of workers.  Local media outlets have been flooded with tales of the worker shortage, written mostly from the perspective of businesses, from Santa Fe to Connecticut. A brewery in Albuquerque is offering workers a free 64-ounce growler of beer after every shift; Applebees is offering free appetizers to people who apply to jobs, as it seeks to hire thousands of workers across the country.

Breslow, the owner of the staffing firm Mis en Place, knows restaurant owners who are offering bonuses as high as $3,000 to new hires, and others who are adding health insurance and 401(k) benefits to employee incentive packages.  “The country is scrambling to get that 33 percent,” Breslow said, referring to those workers who have not returned to the industry. “The leverage is unreal.”

https://www.washingtonpost.com/business/2021/05/24/restaurant-workers-shortage-pay/

 

 

The Perfect Storm Making Everything You Need More Expensive

(By Hanna Ziady, CNN Business, 9 June 2021)

 Steel, lumber, plastic and fuel. Corn, soybeans, sugar and sunflower oil. Houses, cars, diapers and toilet paper. Prices are rising almost everywhere you look.  The post-pandemic recovery is in full swing and the global economy is struggling to keep up. Following a collapse at the start of the pandemic as businesses closed and millions of workers lost jobs, demand has rebounded with a vengeance, spurred by government stimulus and consumers flush with savings.

But companies that idled factories or put workers on furlough during lockdowns are now unable to secure enough raw materials to build the houses, make the cars or assemble the appliances that are suddenly in high demand.  Companies are furiously trying to restock inventories following last year's global recession, straining supply chains already reeling from the pandemic to breaking point. A shortage of shipping containers and bottlenecks at ports have made matters worse and increased the cost of moving products around the world. Throw in accidents, cyberattacks, extreme weather and the huge disruption caused by the desperate hunt for cleaner sources of energy, and you have a perfect storm.

There's no telling how long demand will outpace supply, especially as the pandemic continues to rampage through some of the world's biggest economies. But there have already been shortages of everything from microchips and chicken to chlorine and cheese, and prices are spiking.

The big question is whether shortages and price hikes are temporary byproducts of the pandemic, or if the global economy is changing in ways that could permanently hike the cost of doing business and usher in a new era of inflation. The answer has huge implications for workers, investors, companies and governments. 

What is certain is that, for now at least, inflation is back and it's widespread.  Inflation in countries that belong to the Organization for Economic Cooperation and Development surged in April to the highest level since 2008. Energy price hikes boosted average annual inflation across OECD countries to 3.3%. But prices are rising even when volatile food and energy costs are excluded.

How did we get here?

With US gasoline prices at a seven-year high, it's easy to forget that oil futures crashed last year. Brent crude, the global benchmark, briefly plunged below $20 a barrel last April, as coronavirus lockdowns cratered demand from airlines, motorists and manufacturers.  Brent has since shot up to over $70 a barrel on a dramatic turnaround in demand. US oil hit $70 a barrel on Sunday for the first time in nearly three years. A similar phenomenon is playing out across a host of commodities, industries and products.  "We've never really had anything quite that violent and rapid, both in terms of the change down and the change back up," said George Calhoun, director of the quantitative finance program at the Stevens Institute of Technology in New Jersey. "It's clear that [the economic rebound] created a lot of disruptions, not just in supply chains, but in business models."

Take the auto industry, a prime example of how the events of the past year have upended supply chains, changed consumer behavior and are now fueling price pressures.  The pandemic temporarily shuttered car factories last year, while the recession that followed torpedoed sales. When automakers responded by cutting back vehicle production and thus orders for microchips, semiconductor manufacturers reassigned spare capacity to companies making smartphones, laptops and gaming devices — products in high demand from housebound consumers.

Then, when car sales bounced back faster than expected, manufacturers found themselves at the back of the line for chips. Widespread shortages have forced the likes of Ford (F), Volkswagen (VLKAF), Fiat Chrysler (FCAU) and Nissan (NSANF) to slash production and idle plants in some cases.  That has pushed the price of new cars higher and boosted demand for used vehicles, which are now one of the main sources of inflation in the United States.  Rental car companies, which sold thousands of vehicles early on in the pandemic to shore up their finances, are adding to the crush of demand and holding on to stock that would otherwise have been put up for sale.  At the same time, stimulus checks and low interest rates have made vehicle purchases more accessible to households, many of which want to avoid public transportation and carpooling during the pandemic.

The price of used cars and trucks in the United States jumped 10% over the previous month in April — the biggest increase since 1953, according to the Bureau of Labor Statistics. Prices were up 21% compared with a year earlier, making used cars the primary driver of April's surge in US consumer prices.  "Demand continues to exceed supply for new vehicles and we expect this to continue through 2021, in part due to the production disruption," Mike Jackson, the CEO of AutoNation (AN), one of America's biggest car dealers, said on an earnings call with analysts in April.  "More important though, interest rates and consumer preference for vehicle ownership versus ride share and public transportation are supporting demand," he added. "Americans want individual transportation."

Commodity prices surge

As the pandemic recovery takes hold, the cost of raw materials needed to produce consumer goods and power vast infrastructure spending in China is soaring. US President Joe Biden's infrastructure proposal would only increase demand if approved by Congress.  Booming investment into green technologies is also adding to strong demand for metals such as aluminum and copper, which are used in electric vehicles. Tesla (TSLA) recently added $2,000 to the price of its Model 3. CEO Elon Musk blamed rising raw materials costs.  Iron ore, copper and steel, used to make cars, houses and electrical appliances, have hit record price levels in recent weeks. The Bloomberg Commodity Spot Index, which tracks price changes across a range of metals and agricultural commodities, has jumped roughly 60% over the past year.

In Shanghai, the price of rebar, a type of steel used to reinforce concrete, has fallen from record levels in May but is still 16% more expensive than at the end of last year.  Rising costs have pushed producer price inflation in China to its highest level in nearly 13 years. The country's producer price index — which measures the cost of goods sold to businesses — soared 9% in May from a year ago, according to government data released Wednesday.  In the United States, lumber shortages tied to sawmill shutdowns earlier on in the pandemic have spiked prices, adding nearly $36,000 to the price of an average new home, according to an analysis by the National Association of Home Builders Association.

It's not just the construction sector that's feeling the heat. The rising costs of resin and pulp, for example, are prompting Procter & Gamble (PG) and Kimberly-Clark (KMB) to increase the prices of household staples such as tampons, diapers and toilet paper.  A growing list of crises on the supply side has exacerbated the commodities crunch. The Suez Canal blockage delayed goods shipments in March. Drought in South America has weighed on corn and sugar output. A deep freeze in Texas and the Colonial Pipeline ransomware attack tightened the market for plastic and fuel, while India's Covid-19 outbreak disrupted ports and supply chains.  "It's really been a perfect storm," said Warren Patterson, head of commodities strategy at ING.

The latest problem: JBS Meat, a major beef and pork producer, suffered a cyberattack that forced the company to shut down plants in North America and Australia last week. Factories have since come back online but the disruption could cause wholesale meat prices to jump, analysts said.  Food prices are already rising due to a surge in demand for agricultural commodities such as corn and soybeans driven by China, where demand for animal feed is soaring as hog herds recover from an African swine fever outbreak, according to Patterson. The government has also been rebuilding depleted domestic corn reserves, he added.

On the supply side, dry weather in Brazil, Thailand and Europe has weighed on crop yields, while Russia, the world's leading wheat exporter, has implemented an export tax to bolster domestic supplies and cool prices.  Global food prices rose for a twelfth consecutive month in May and at their fastest monthly rate in more than a decade, according to the UN Food and Agriculture Organization. The FAO Food Price Index, which tracks a wide range of products, was nearly 40% higher last month than its level a year ago.

While the cost of raw ingredients accounts for a small portion of the price that consumers pay for goods in supermarkets and restaurants, food companies such as NestlĂ© (NSRGY) and Unilever (UL) have already announced price increases on certain product lines in response to commodity inflation.  An increase in supply could ease prices gains, particularly because at these levels there is strong incentive for farmers to plant more crops, Patterson said. In other words, the trend could be temporary.  "The move we've seen across most commodities is part of the usual recovery, a cyclical uplift," he added. "As we see the global economy normalize, once we've recovered, demand will ease off and I expect prices to. I'm not of the view that we're in a commodities super cycle."

Logistics and labor costs climb

Commodities are not the only factor driving prices higher, however.  Logistics and labor costs have also increased and a shortage of workers in some industries could intensify pressure on companies to raise wages even further.  "When it comes to the economy we're building, rising wages aren't a bug; they're a feature," Biden said in a speech during a recent visit to Cleveland, Ohio.  Labor shortages, which have also become a problem in Europe, are partly related to the speed at which economies reopened and are likely to normalize once welfare payments dry up, stimulus checks have been spent and workers in sectors such as hospitality and travel feel more confident that businesses won't be forced to shut again, said Andrew Kenningham, chief Europe economist at Capital Economics.

But that's little consolation to companies trying to get products out the door. For Whirlpool (WHR), which makes washing machines, fridges and ovens, the rising cost of commodities, labor and logistics has led to several rounds of price increases.  "That's the only way to mitigate significant cost inflation," CEO Marc Bitzer said in an interview with Bloomberg Television last month. "There is talk or hope that this is a temporary blip. We see it elevated for a sustained period," he added.  Supply chain constraints have forced the company to make products based on the goods it has available rather than on customer orders. "That is anything but efficient or normal but that's how you have to run it right now," Bitzer said. "The supply chain is pretty much upside down."

In Germany, the industrial heart of Europe, supply chain disruptions exacerbated by the Suez Canal blockage offer one possible explanation for an unexpected drop in industrial orders in April, according to Carsten Brzeski, head of research at ING.  A growing list of companies around the world have flagged higher supply chain costs — from engine manufacturer Cummins (CMI) to exercise equipment maker Peloton (PTON) — partly driven by soaring shipping charges, which have made it much more expensive to move goods. If demand remains elevated, more firms may opt to pass these costs on to customers.

The Logistics Managers' Index, a US economic indicator, attests to rising cost pressures in supply chains. The monthly gauge asks corporate supply chiefs where they see future expenses relating to inventory, transportation and warehousing.  In May, respondents predicted that over the next 12 months costs across all three categories would experience their highest increase in the nearly 5-year history of the index.

The end of easy choices

With price hikes apparent on store shelves and in official data, inflation expectations among businesses and consumers are rising, according to various surveys. That in itself poses a challenge. If businesses and consumers think that higher prices are here to stay, they may change their behaviors in ways that cause price pressures to persist.  For example, workers might demand higher wages, forcing companies to increase the price of their goods and placing additional upward pressure on salaries.

At least for now, central bankers are of the view that price hikes will prove transient and are unlikely to lead to persistently higher inflation — even as some economists including former US Treasury Secretary Larry Summers and former Bank of England governor Mervyn King sound the alarm.  "Neglecting inflation leaves global economies sitting on a time bomb," Deutsche Bank economists warned in a research note this week. If central banks wait too long to raise interest rates they will be forced into "abrupt" policy changes, causing significant disruption to markets and the economy, they argued.

Yet Federal Reserve officials remain sanguine. "Although continued vigilance is warranted, the inflation and employment data thus far appear to reflect a temporary misalignment of supply and demand that should fade over time as the demand surge normalizes, reopening is completed, and supply adapts to the post-pandemic new normal," Lael Brainard, a Federal Reserve governor said in a speech last week.  Policymakers in the United States and Europe are "looking through" upward pressure on prices and "basing monetary policy decisions on where they think inflation will be in two years' time rather than in the next six to 12 months," said Kenningham of Capital Economics.

Still, whereas a year ago concerns centered on deflation, the risks now are "much more balanced and possibly tilted to the upside in some cases," Kenningham told CNN Business.  "The risks of inflation rising on a sustained basis are much higher in the United States than in Europe," he added, pointing to far more generous financial support for US households, which has propped up income and helped boost savings to levels not seen in more than 70 years.  "In brief," wrote the Deutsche Bank economists, "the easy policy decisions of the disinflationary 1980-2020 period appear to be behind us."

https://www.cnn.com/2021/06/09/business/rising-prices-inventories-post-pandemic/index.html

Saturday, September 4, 2021

Marvel And DC Comics Face Backlash Over Pay: ‘They Send A Thank You Note And $5,000 – The Movie Made $1 Billion’

 As comics giants make billions from their storylines and characters, writers & artists are speaking out about the struggles for fair pay.

(Sam Thielman, The Guardian, 9 August 2021)

Watch any superhero movie and you will see a credit along the lines of “based on the comic book created by”, usually with the name of a beloved and/or long-dead writer or artist. But deep, deep in the credits scroll, you will also see “special thanks” to a long roster of comic book talent, most of them still alive, whose work forms the skeleton and musculature of the movie you just watched. Scenes storyboarded directly from Batman comics by Frank Miller; character arcs out of Thor comics by Walt Simonson; entire franchises, such as the Avengers films or Disney+ spinoff The Falcon and the Winter Soldier, that couldn’t exist without the likes of Kurt Busiek or Ed Brubaker.

The “big two” comic companies – Marvel and DC - may pretend they’ve tapped into some timeless part of the human psyche with characters such as Superman and the Incredible Hulk, but the truth is that their most popular stories have been carefully stewarded through the decades by individual artists and writers. But how much of, say, the Marvel Cinematic Universe’s (MCU) $20bn-plus box office gross went to those who created the stories and characters in it? How are the unknown faces behind their biggest successes being treated?

Not well, according to Brubaker who, with Steve Epting, revived Captain America’s sidekick Bucky Barnes to create the Winter Soldier, portrayed by Sebastian Stan in Marvel’s films and shows. “For the most part, all Steve and I have got for creating the Winter Soldier and his storyline is a ‘thanks’ here or there, and over the years that’s become harder and harder to live with,” Brubaker recently wrote in a newsletter.

“I have a great life as a writer and much of it is because of Cap and the Winter Soldier bringing so many readers to my other work,” he added. “But I also can’t deny feeling a bit sick to my stomach sometimes when my inbox fills up with people wanting comments on the show.” (Marvel told the Guardian it had to “decline to comment out of respect for the privacy of [Brubaker and Epting’s] personal conversations [with the company].”)

Comic creators are “work-for-hire”, so the companies they work for owe them nothing beyond a flat fee and royalty payments. But Marvel and DC also incentivise popular creators to stay on with the promise of steady work and what they call “equity”: a tiny share of the profits, should a character they create or a storyline they write become fodder for films, shows or merch. For some creators, work they did decades ago is providing vital income now as films bring their comics to a bigger audience; they reason – and the companies seem to agree – it’s only fair to pay them more. DC has a boilerplate internal contract, which the Guardian has seen, which guarantees payments to creators when their characters are used. Marvel’s contracts are similar, according to two sources with knowledge of them, but harder to find; some Marvel creators did not know they existed.

A Marvel spokesman said there was no restrictions on when creators could approach the company about contracts, and said that they are having ongoing conversations with writers and artists pertaining to both recent and past work. A DC spokesman did not return multiple requests for comment. But the use of these contracts is at these companies’ discretion and the promised money can fall by the wayside.

“The squeaky wheel gets the grease,” Jim Starlin, who created Thanos, recently told the Hollywood Reporter; Starlin negotiated a bigger payout after arguing that Marvel had underpaid him for its use of Thanos as the big bad of the MCU. Prolific Marvel writer Roy Thomas got his name added to the credits of Disney+ series Loki after his agent made a fuss. But these are creators that Marvel needs to keep happy; things can go very differently if nobody cares when you complain.

Bestselling author Ta-Nehisi Coates, who wrote a run of Marvel’s Black Panther and followed Brubaker and Epting’s Captain America run with his own a few years later, says that he believes Marvel has moral obligations to its artists and writers that go beyond contracts.  “Long before I was writing Captain America, I read [Brubaker and Epting’s] Death of Captain America storyline, and Return of the Winter Soldier, and it was some of the most thrilling storytelling I’d ever read,” Coates says. “I’d rather read it than watch the movies – I love the movies too – but it doesn’t seem just for them to extract what Steve and Ed put into this and create a multi-billion dollar franchise.”

Coates says he feels fairly treated when it comes to his own work, but he is adamant that lesser known names deserve better treatment from the big studios, no matter what their contracts say: “Just because it’s in a contract doesn’t make it right. If I have some kind of leverage over you, I can get you to sign a contract to fuck you over. It’s just legalist.”

Over the decades, Marvel and DC have become parts of Fortune 500 companies: the Walt Disney Company owns Marvel, and DC is owned by a subsidiary of AT&T. Now, deciding what share of the success their comic creators deserve is a matter of complex wrangling between Marvel and DC, which want to maintain good relations with their talent, and the vast bureaucracies above them.

Among creators, there is a general sense that it has become harder to get paid at Marvel. One source told the Guardian that Marvel subtracted its own legal fees from a protracted negotiation over royalty payments. Others who have worked for DC and Marvel say both count on artists and writers preferring not to spend time chasing them for royalties.

“Lawyer up, always, with comic book company contracts,” says Jimmy Palmiotti, longtime writer of DC characters such as Jonah Hex and Harley Quinn. “They are not in the business of feeding you the math.” Once a year, freelancers are allowed to audit the returns on their creations for DC and Marvel, but Palmiotti says it happens too rarely: “I can count on one hand the number of creators who’ve actually audited a major comics company.”

According to multiple sources, when a writer or artist’s work features prominently in a Marvel film, the company’s practice is to send the creator an invitation to the premiere and a cheque for $5,000 (£3,600). Three different sources confirmed this amount to the Guardian. There’s no obligation to attend the premiere, or to use the $5,000 for travel or accommodation; sources described it as a tacit acknowledgment that compensation was due.  Marvel declined to comment on this, citing privacy concerns. “We can’t speak to our individual agreements or contracts with talent,” said a spokesman.

Several sources who have worked with Marvel say that remuneration for contributing to a franchise that hits it big varies between the $5,000 payment, nothing, or – very rarely – a “special character contract”, which allows a select few creators to claim remuneration when their characters or stories are used. There are other potential ways to earn more – many former writers and artists are made executives and producers on Marvel’s myriad movies, cartoons and streaming series, for example – but those deals depend on factors other than legal obligation.  “I’ve been offered a [special character contract] that was really, really terrible, but it was that or nothing,” says one Marvel creator, who asked not to be named. “And then instead of honouring it, they send a thank you note and are like, ‘Here’s some money we don’t owe you!’ and it’s five grand. And you’re like, ‘The movie made a billion dollars.’”

Both Marvel’s “special character contract”, or DC’s equivalent, a “creator equity” contract, are ways to keep creators happy enough that they don’t hold back all of their original creations for competitors. DC pioneered these contracts back in the 1970s and 1980s, responding in part to Marvel’s treatment of Captain America creator Jack Kirby. Jim Shooter, then Marvel’s editor-in-chief, refused to return original art to Kirby unless he signed a lengthy release form allowing the company to adapt his creations – including the Incredible Hulk, the Fantastic Four, Iron Man, Black Panther and the X-Men – without any compensation. DC saw an opportunity to score PR points, and offered Frank Miller, Alan Moore and Dave Gibbons what appeared to be much better contracts for works such as Ronin and Watchmen. (The company used a technicality to renege within a few years).

Brubaker has recalled once attending Comic-Con, where he watched Roz Kirby yell at Jim Shooter about his mistreatment of her husband in the middle of a panel on creators’ rights. (The panel, incidentally, included Moore and Miller, who were celebrating the apparent fairness of their own contracts at DC.) Decades later, Brubaker helped Marvel find success with his Captain America run with Steve Epting. According to sources, Brubaker and Epting showed up in tuxedos to the premiere party for Captain America: The Winter Soldier, a movie directly based on their comics, only to find that they weren’t on the list. Brubaker texted Sebastian Stan, the actor who played his and Epting’s character, Bucky Barnes, and he let them in.

Some creators told the Guardian that they did not know that Marvel even had the special character contract like DC. In fact, the Guardian has seen an application for the “Marvel Special Character Contract”, in which creators can formally ask Marvel whether one of their characters qualifies for extra payouts. In the application form, Marvel explicitly reserves the right to tell creators their characters aren’t original enough to get the bonus, warning that “the decisions are final” and not subject to appeal. DC uses the same measure; in 2015, the studio was criticised for cancelling payments to writer Gerry Conway for his character Power Girl, which the company retroactively decided was derivative of Supergirl and therefore ineligible for the contract, according to Conway. He no longer receives payments for her, he confirmed to the Guardian. DC did not respond to request for comment.

The Power Girl incident highlights how ethically fuzzy these contracts are, since they’re issued by DC and Marvel, drawn up unilaterally by the companies, and paid out when the companies account for their many films, TV shows, video games, trading cards, action figures and sundry other merch. One creator, who asked to remain anonymous, said he and other creators sometimes go to Target to take pictures of action figures of their characters for which payments are due, to demonstrate that their cheques are short.

DC and Marvel came into their own at a time of change in copyright law. The Copyright Act of 1976 gave artists the one-time right to cancel their contracts with IP holders, an option many exercised after witnessing the mistreatment of Superman creators Jerry Siegel and Joe Shuster, who were left penniless. Artist Al Jaffee once claimed his pay cheques from EC Comics were issued with contracts on the back, so he couldn’t cash them without signing over the rights to his work. This was a common practice throughout the industry, including at Marvel, and one that was reevaluated in the wake of the act.

As comics publishers evolved into major media operations, their staff grew concerned about mistreatment of talent. There were famous fights over royalties, and thorny questions over what credit was due to thousands of co-creators working in a shared universe. In 2000, a consortium of publishers founded a charity to directly aid artists who’d fallen on the hardest times, called the Hero Initiative. (Marvel is a founding member, and AT&T lets employees donate directly from their paycheques.) By the 1980s, people who worked in comics at every level were fans, in the same way that even the ushers on Broadway can sing and dance if called upon. In 1986, DC editor Paul Levitz and DC president Jeanette Kahn were working on new schemes to more fairly compensate writers and artists. Moore, Gibbons, and Miller’s contracts were meant to usher in a new era of fairness. It was a long time coming: some were already looking askance at DC after its treatment of Siegel and Shuster came to light during the production of the 1978 film Superman.

But Moore and Gibbons’s Watchmen was a huge success, going through multiple reprints – unprecedented for a graphic novel – and DC never had to let its right to republish lapse, so it never did. The pair had a right to a share of merchandise profits; DC produced merch, classified it as “promotional items” and told Moore and Gibbons they weren’t owed anything. The vaunted in-house contracts that can make creators’ lives livable can always be subverted.

To the extent that there is any semblance of fairness in the industry now, it’s primarily Levitz’s doing, alongside Kahn and Karen Berger, who is now at Dark Horse Comics. Levitz left DC in 2009, but his influence is still felt across the industry.  “You want to create a situation where you never get to the old Russian joke where they pretend to pay us, and we pretend to work,” Levitz says. “You want people to win when the companies win. I’m proud of the fact that we improved the quality of how we treated creative people.” More than one creator recounts calling Levitz to ask for more money because of a scene in a lucrative Batman movie that lifted plot points or names from their work, then being shocked when they got it.

Many of his peers say that Levitz was a bulwark against meddling by executives at Warner Brothers. For years, he blocked the publication of Watchmen sequels, of which Moore and Gibbons disapproved – something DC did soon after Levitz left, to widespread condemnation. Without another Levitz, the “big two” are once again attracting the criticism that led to the creation of these elusive “special” contracts in the first place. Some creators have left the medium entirely, but others have founded their own studios, such as Image and Dark Horse, providing creators with alternative outlets. As Marvel and DC may find, more creators – Brubaker and Jupiter’s Legacy creator Mark Millar are already among them – will simply not work for them again.

https://www.theguardian.com/books/2021/aug/09/marvel-and-dc-face-backlash-over-pay-they-sent-a-thank-you-note-and-5000-the-movie-made-1bn?CMP=oth_b-aplnews_d-1