Democrats See Spending Bill As A Way To Boost Union Membership

The bill includes proposed fines and tax provisions that could steer more business to unionized companies and make it easier for workers to organize.

President Joe Biden and congressional Democrats are hoping to enact a transformative progressive agenda through their $3.5 trillion spending bill.

The House legislation would expand health care access and paid leave, finance new pre-kindergarten and child care programs, and encourage a shift away from fossil fuels to address climate change, among other ambitious policies. It could also boost membership in labor unions.

The package is still a long way from becoming law. Many proposals could be altered or dropped when the House and Senate negotiate, and it’s possible the bill as envisioned never reaches Biden’s desk. But House Democrats have advanced a grab bag of measures that could make it harder for employers to disrupt union efforts, and could steer more business to companies with organized workforces through tax credits.

Democrats, who have slim majorities in both chambers of Congress, hope to use a process known as budget reconciliation to pass the package. That strategy would allow them to approve a bill without any Republican votes ― but the reconciliation rules could force Democrats to drop some of their labor provisions if they don’t meet certain requirements.

The proposals on their own might not be enough to turn around the low national rate of union membership, which has been declining for decades. Just 6.3% of private-sector workers now belong to a union. But the proposals would still amount to some of the most significant reforms to labor law in more than 70 years.

Fines for union-busting

The most notable reform Democrats are pushing is the creation of civil penalties against employers who violate labor law.

Under the current system, employers don’t have to pay fines if they’re caught illegally busting a union or retaliating against workers who try to organize. If a worker is fired for leading a union effort, they’re usually only entitled to back pay, minus any wages they earned elsewhere after getting canned.

The legislation that the House Committee on Education and Labor recently advanced would adopt fines proposed in a separate, more comprehensive bill called the Protecting the Right to Organize Act. Under the proposal, employers could be fined up to $50,000 for each unfair labor practice, and those penalties could be doubled if the employer has a history of such lawbreaking. Furthermore, those fines could be levied against not just the company but its individual officers as well.

“Right now, low road companies know that in many cases it’s cheaper to violate labor law.”

- IUPAT President Jim Williams Jr.

Celine McNicholas, labor counsel at the left-leaning Economic Policy Institute, said those fines would help level the playing field between employers and workers during organizing drives.

“Our current system does not provide for monetary penalties for these violations, so there is little incentive for employers to follow the law,” McNicholas said in an email. “We see evidence of this in the data on union elections. Employers are charged with violating the law in over 41 percent of all union elections.”

She said civil monetary penalties would help bring collective bargaining law “in line with other worker protection statutes,” and give regulators an enforcement tool to keep employers in check. Other workplace-related fines under the Occupational Safety and Health Administration and the Labor Department’s Wage and Hour Division would also increase under the Democrats’ proposal.

To survive under reconciliation, a measure must show that it would have a significant impact on the federal budget or revenues. Unions, and some Democrats, say they’re confident the PRO Act and other workplace fines would pass muster under the so-called Byrd rule, named for the late Sen. Robert Byrd (D-W.Va.), since fines raise revenue.

“It is obvious that increased civil penalties for violating already-existing labor, health and safety, and [wage theft] provisions should have no problem,” Jim Williams Jr., president of the International Union of Painters and Allied Trades, said through a spokesperson. IUPAT has been one of the most prominent backers of the PRO Act.

“Right now, low road companies know that in many cases it’s cheaper to violate labor law or run afoul of OSHA than it is to actually comply with existing laws,” Williams said. “This would go a long way towards stopping that.”

But Democrats are pursuing other labor law reforms that appear to be on shakier ground.

For instance, the House legislation would forbid employers from holding mandatory “captive audience” meetings to try and dissuade workers from unionizing. Such meetings are a fixture of contentious anti-union campaigns, like the one Amazon waged earlier this year at a warehouse in Alabama.

The legislation would also ban employers from permanently replacing workers during a strike, a tactic that can dramatically weaken a union’s leverage during a work stoppage. Democrats would presumably have a harder time demonstrating how such a provision directly affects the federal budget.

President Joe Biden speaks in the State Dining Room at the White House, Sept. 9, 2021.
President Joe Biden speaks in the State Dining Room at the White House, Sept. 9, 2021.
Andrew Harnik via Associated Press

Tax credits for union-made cars

The portion of the bill that Democrats on the House Ways and Means Committee advanced last week would provide a juicy tax credit for consumers who buy electric vehicles built in the U.S. with union labor.

Current law already provides a $7,500 tax credit that allows filers to defray the cost of buying an EV, but it starts to phase out once a manufacturer sells 200,000 units. The House proposal would eliminate that cap and create another $4,500 credit if the vehicle is assembled in a union plant in the U.S.

By steering car shoppers toward manufacturers with collective bargaining agreements, the measure would essentially reward union automakers like the Big Three ― Ford, General Motors and Stellantis (formerly Fiat Chrysler) ― and punish non-union ones like Toyota, Honda, Kia and Tesla. The U.S. facilities operated by the latter companies are not unionized, so their vehicles wouldn’t be eligible for the $4,500 bonus credit.

The proposal has not gone over well among so-called “transplants,” foreign-based automakers producing cars in the U.S. Toyota said the provision would discriminate “against American autoworkers based on their choice not to unionize.” Elon Musk, CEO of the California-based Tesla, claimed on Twitter that the proposal was “written by Ford/UAW lobbyists,” a reference to the United Auto Workers union.

The idea of using the tax code to encourage union membership has drawn fire from Republicans, particularly those in the South whose districts include non-union auto plants. Rep. Drew Ferguson (R-Ga.) told Automotive News that the proposal would end up “pitting Americans in one state versus another through a direct subsidy.”

Meanwhile, Rep. Dan Kildee (D-Mich.), who is from the auto town Flint, is championing the union-made provision. Kildee argued that the U.S. needs to make “strategic investments now that will result in American workers and union labor making these vehicles here.”

Kildee signaled last week that the union-made provision could be tweaked, saying he was open to language that would “reward companies that are ‘very high labor standard’ companies” but not necessarily unionized.

A tax credit for union membership

Many union members used to be able to deduct their dues from their taxable income, since dues are an expense incurred as workers earn their income. But Republicans did away with that, and other miscellaneous tax deductions, in the 2017 Tax Cuts and Jobs Act, steering more filers to the bigger “standard” deduction.

Now Democrats are looking to reestablish a tax break for union membership, in a way that would reach more tax filers.

A measure the Ways and Means Committee approved would create an “above the line” tax deduction for union dues, meaning a worker could take advantage of it whether they itemize their taxes or take the standard deduction. The old deduction the GOP jettisoned in 2017 required that filers itemize their returns, and their dues and other expenses had to amount to more than 2% of their adjusted gross income to be worth anything as a tax break.

An above-the-line deduction would be available to more workers, but the Democratic proposal comes with a cap of $250 ― the same limit the TCJA applied to teachers for deducting what they spend out of pocket for classroom supplies. For a typical worker, the tax break might be worth around $50 a year.

Alexandra Thornton, senior director of tax policy at the Center for American Progress, called the proposal a “step in the right direction.” Thornton has argued for creating a union dues tax deduction to create parity between workers and employers. Businesses, she notes, can already deduct the legal costs they incur when bargaining with unions and fighting organizing drives.

“The above-the-line tax deduction for union dues in the Democratic proposal would be capped at $250.”

Those deductions are not capped for businesses, however, and Thornton questioned the wisdom of limiting the deduction for workers.

“It’s not just a question of whether the worker is better off with the deduction than without. It’s also whether the tax code is fair,” she said in an email. “And company expenses to negotiate pay, benefits, safety measures, etc., are not subject to a cap.”

A narrow path to passage

Under the reconciliation process, the Senate parliamentarian, Elizabeth MacDonough, could determine that certain labor provisions in the spending bill do not comply with the Byrd rule. MacDonough has already shot down a Democratic proposal on immigration in the bill, finding that a pathway to citizenship for Dreamers cannot be included. Democrats could overrule MacDonough or replace her with another parliamentarian, but for now they appear unlikely to go that route.

Democrats’ tenuous hold on the Senate could also stymie the union provisions. The party holds a bare 50-50 majority in the upper chamber, with Vice President Kamala Harris providing the tie-breaking vote. A single Democrat could block the PRO Act’s fines for union-busting by withholding support for them. Sen. Joe Manchin (D-W.Va.), one of the party’s highest-profile moderates in the Senate, has co-sponsored the PRO Act, but Sen. Kyrsten Sinema (D-Ariz.), another of them, has not.

The possible enactment of PRO Act penalties, in particular, has worried business groups, given how it could alter the landscape in the workplace during union efforts. The U.S. Chamber of Commerce argues that the provisions “have next to nothing to do with outlays or revenues” for the federal government, and that they should be stripped out under the Byrd rule. Until this language is removed, the lobby said, “it remains a significant concern.”

Williams, the IUPAT president, does not disagree that fines for unfair labor practices would be a huge deal.

“It would mark the first time in decades that labor law has gotten more favorable for the average worker,” he said.

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