Biden's Plans for Unions and Working Families

Brief updates on the PRO Act, the American Jobs Plan, and the American Families Plan

May 10, 2021

On the eve of his one-hundredth day in office, President Biden delivered a State of the Union Address which both reflected on the progress we’ve made this year, and also painted a picture of where we should go from here. Front and center in this speech was his goal of rebuilding the middle class. Outlining a vision of how to rebuild the middle class, Biden mentioned three bills he wants Congress to put on his desk so that he can sign them into law: the PRO Act, the American Jobs Plan, and the American Families Plan. Because legislative text for some of these bills is not yet publicly available, but many general priorities for such bills are, I wanted to briefly introduce these bills before analyzing the details in future articles.

If you enjoy reading this type of less comprehensive article, where I introduce topics I plan to cover at length in the future, I would be happy to turn this into a Brief Update series. After writing about all three of these bills, this article didn’t end up being as brief as I had initially planned, but I still hope that this introduces you readers to the ongoing efforts for working families. As always, feel free to leave a comment or otherwise reach out with your thoughts on these topics or this type of article. That being said, let’s start by looking at the Protecting the Right to Organize Act.

Protecting the Right to Organize (PRO) Act

President Biden is one of the most vocally pro-union presidents the United States has had in decades, at least rhetorically. He may soon be able to prove how supportive of unions he is by signing the PRO Act into law, should the Senate vote to pass it. Still, Biden has repeatedly made his support of unions and collective bargaining known. During his State of the Union Address, and on several other recent occasions, President Biden has said that:

“The middle class built this country, and unions built the middle class.”

During Biden’s presidency, one of the most significant and overdue pieces of legislation for workers’ rights in over half a century passed by a vote of 225-206 in the House of Representatives, and currently awaits Senate debate. If enacted, the PRO Act would strengthen protections for union and non-union workers alike, while making it easier for non-unionized workers to form a union. The National Labor Relations Act of 1935 laid much of the groundwork for such collective bargaining provisions, but nearly a century after the passage of this FDR-era law, certain loopholes and legal grey areas should be clarified.

Anti-union billionaires like Tesla CEO Elon Musk all too frequently threaten and endanger their employees, yet they only occasionally face limited accountability for their actions. The PRO Act would amend the National Labor Relations Act and other laws to defend workers against such unscrupulous behavior and strengthen enforcement and penalties for employer violations.

The PRO Act would also help protect workers from being misclassified as independent contractors. Under current law, many workers who should be considered employees, and therefore receive the benefits and protections associated with being an employee, are instead misclassified as independent contractors running their own businesses. Currently, most U.S. states apply a test for classifying employees which primarily hinges on whether the employer controls how or when the worker performs their labor.

These vague test parameters frequently result in legal grey areas when it comes to “gig” platforms like Uber and Lyft, who spent hundreds of millions of dollars in California to mislead voters into supporting Proposition 22, the passage of which ensured that their drivers would not get employee benefits or protections. Companies who employ gig workers – like “Uber Technologies, Inc.”, for instance – have historically insisted that they’re mostly in the “tech” or “marketing” business; that they are merely offering their software platforms as a service, which connect independent business owners with their customers; and that they are not transportation companies employing drivers, or companies otherwise engaging in the respective industry their platform facilitates. I have my doubts about this line of reasoning, and I have my own personal experiences with this type of company that I will discuss in future articles.

This “independent contractor” designation does make sense, for example, in the context of a company – who is not in the landscaping business – hiring an established landscaper to trim plants near their facilities. However, when an employer begins hiring workers to perform the core services offered by their company, and starts telling people who should be employees that they are now proud, independent business owners, this makes little sense to me. Provisions in the PRO Act would help clarify the test applied to determine whether a worker is an employee or an independent contractor.

The new test would have three parts, and is therefore often called an “ABC” test. Those three criteria to be an independent contractor are:

(A) The individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
(B) The service is performed outside the usual course of the business of the employer; and
(C) The individual is customarily engaged in an established trade, occupation, profession, or business of the same nature as that involved in the service performed.

This new test would prevent companies from essentially telling their workers – as a Marketplace podcast (a type of internet radio show, essentially) called The Uncertain Hour put it – “Congratulations! You’re an entrepreneur now” rather than an employee. These misclassified workers aren’t employees of a ride-hailing company like Uber or Lyft, but instead, they are “Jane Smith’s Driving Service, LLC”, the independent transportation business, or something to that effect.

Such practices all too frequently result in these “entrepreneurs” effectively earning less than minimum wage, like the janitor interviewed in the aforementioned podcast episode, especially when calculating net income after operating expenses are incurred by the worker. Employee misclassification for the apparent purpose of tax avoidance and profit maximization should be illegal, and the PRO Act would be a great step towards protecting workers’ rights to fair wages and better working conditions.

The PRO Act also prohibits other unethical labor practices that are currently legal. These unethical practices include mandatory “captive audience meetings” designed to force feed anti-union propaganda to employees. If the PRO Act passes, companies can still make their anti-union perspectives available to workers, but these employers would no longer be able to fire their workers for refusing to attend these mandatory meetings. You can read about all the shady tactics Amazon allegedly used in Alabama to get an idea of what else employers do to prevent unionization, but I will likely cover this in a future article as well. Many of these PRO Act provisions which protect workers are long overdue, and should be a top priority for the Democratic party, but passing the PRO Act through the Senate will still be a challenge.

Not only are there currently no Republican Senators cosponsoring the PRO Act, but there are also corporate Democrats refusing to support the bill as well. When asked about the PRO Act by the Arizona Chamber of Commerce, Senator Kyrsten Sinema explained how she makes her decisions:

“The way I make decisions on behalf of Arizona and for our constituents is by listening to the business leaders who will be impacted by these decisions.”

Senator Sinema apparently doesn’t listen to workers about their working conditions, or whether they are being paid a living wage; instead, she listens to the business leaders. I suppose this explains why she would vote down a $15 per hour minimum wage, because even though it is popular enough to gain the bipartisan support of both Republican and Democratic voters in Florida, workers’ rights are rarely popular with their bosses.

Perhaps the Democratic leadership needs to use political leverage to get the corporate Democrats to either lead with their own ideas or follow party leadership. Even Senator Joe Manchin (D-WV) recently voiced his support for the PRO Act at a United Mine Workers of America event last month. Those who do not yet support the PRO Act could lose Congressional committee positions if Democratic leadership felt inclined to encourage party unity, but in the meantime, please contact your Senators to let them know how you feel about the PRO Act and workers’ rights!

The American Jobs Plan

In addition to strengthening workers’ rights to organize, President Biden also wants to put union members to work rebuilding our crumbling infrastructure. The American Jobs Plan includes an ambitious proposal to “modernize 20,000 miles of highways, roads, and main-streets”, to replace lead pipes which deliver drinking water, to deliver broadband internet connectivity to underserved communities, and to generally modernize U.S. infrastructure by twenty-first century standards. If passed, this would not only create millions of good, middle-class jobs, but it would also be a significant step towards addressing climate change.

Because the broader climate crisis entails so many overlapping crises which affect us all – and yet also disproportionately affect certain groups of people and the residents of certain areas in different ways – confronting these crises requires a multifaceted response. The good news is that our response to these crises means we can create millions of jobs for workers in several different sectors. The International Union of Operating Engineers can put their members to work constructing, repairing, and modernizing thousands of miles of roads; the United Association of Plumbers and Pipefitters can help replace lead pipes and work on other service lines; United Steelworkers can help manufacture integral components, including parts for more wind turbines; the Amalgamated Transit Union’s members can drive and operate a modernized mass transit system; the list goes on.

While this is a good first step towards achieving “net-zero greenhouse gas emissions through a fair and just transition for all communities and workers” like the Green New Deal seeks to achieve, the current AJP proposals may not be enough. The American Jobs Plan currently allocates roughly $2 trillion in total spending, but Representative Alexandria Ocasio-Cortez has previously stated that a more ideal proposal would spend at least an average of $1 trillion per year over the next ten years.

Just as spending too little to address the Coronavirus recession proved to be shortsighted, so too, I suspect, will spending too little to address the climate crisis. If we can spend public funds to save the planet, create good jobs, and address inequality and injustice at the same time, then in my humble opinion, that is all money well spent. Besides, with the mounting costs associated with ignoring climate change, such as the costs associated with letting entire California cities be engulfed in flames, it stands to reason that an ounce of prevention would be worth a pound of cure, so to speak.

I am concerned that the spending may be limited due to the unnecessary fixation on raising taxes to offset spending. Democrats are essentially engaging in a two-front fight by doing so: not only is the Biden administration proposing a massive jobs program, but the plan also calls for changes in the tax code to raise tax revenues. I personally think that many of the changes are good ideas, such as eliminating corporations’ ability to avoid paying taxes by offshoring profits in foreign tax havens, but limiting the scope of this bill as a result is counterproductive, and getting Congress to support the entire package is questionable. Infrastructure can often find bipartisan support, but Republicans are infamously opposed to most tax code changes that don’t involve tax cuts for billionaires.

Senate Minority Leader Mitch McConnell even went as far as to say recently that “100% of my focus is on stopping this new administration.” This obstructive sentiment is reminiscent of his priorities during the previous Democratic administration. I referenced this infamous quote in another article, but I am once again reminded of how McConnell said in 2010 that, “Our top political priority over the next two years should be to deny President Obama a second term.” McConnell is not interested in helping working families; he does not want to “insure domestic tranquility”; he does not want to “promote the general Welfare”; McConnell only seeks to obstruct progress if doing so makes his political opponents look bad.

I’m not even certain we can get all 50 Democrats in the Senate to agree on such changes to the tax code, given how corporate Democrats like Senator Sinema only listen to “business leaders”. Even though I personally support these types of changes to the tax code, I am not convinced about the political path to passing this bill, nor am I convinced of the economic necessity of finding ways to “pay for” spending public funds.

Just as members of Congress never ask how we can “pay for” increasing the world’s largest military budget year after year; just as Congress never asks how we can “pay for” tax cuts for billionaires; just as Congress did not find ways to “pay for” the Coronavirus relief and economic stimulus spending, because money spent averting a crisis will pay off in the long run – so too is it unnecessary for a currency-issuing nation like the United States to raise tax revenues before it can spend public funds.

I recently finished reading The Deficit Myth by economics professor Stephanie Kelton, and her book outlines the details of why we do not have to tax or borrow money before spending public funds. Professor Kelton also wrote an article about this specific problem with the American Jobs Plan. While I plan to describe Professor Kelton’s findings in further detail when I write a more comprehensive review of her book, the fundamental takeaways are relatively simple to understand. I highly recommend you read her article on these subjects, and her book if you get a chance, but I will briefly describe my understanding of her perspective on the matter.

When a country like the United States, whose federal government controls the supply of its currency, U.S. dollars, and these dollars are not tied to a finite resource like gold, and all U.S. debt is denoted in these dollars rather than a foreign currency, then the United States can always raise the funds to pay its expenses and debts.

In short, Kelton argues that paying for policies is the easy part. Resourcing the policies – which generally involves making sure that the labor and materials flow to their intended destinations, and ensuring that the combination of the labor and materials produces the intended outcome – all while keeping inflation under control, is the hard part. This means that concerns about deficit spending and the national debt are mostly blown out of proportion, and that irrational fears of spending public funds only tend to make headlines when doing so stands in the way of meaningful progress.

We can manage the risk of inflation, but we cannot continue to risk our planet for the sake of maintaining an unjust status quo. Passing the American Jobs Plan would be a great step in the right direction, but it would be the first step of a long journey we have before us. Hopefully Congress will pass at least $2 trillion in spending, and will make future commitments to spare no expense in leading the effort to save the planet. We can create millions of jobs in the process, uplift and expand the middle class, and jumpstart a new era of American ingenuity.

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The American Families Plan

Once our labor force returns to work, they will need a way to reliably and affordably take care of their family members who remain at home. We also need to revamp our education system to train the next generation of workers and foster the skills they need to succeed. Although only a handful of details are publicly available surrounding the American Families Plan, these types of general goals within this plan sound encouraging. One fundamental priority is making childcare, education, and paid leave more accessible to all families across the country.

Should Congress act on Biden’s proposals, one policy would ensure that working families pay no more than 7% of their incomes towards childcare. The cynical accountant in me suspects that the details of this policy would likely end up looking similar to the technocratic, overly complicated Premium Tax Credit provisions implemented as part of the Affordable Care Act, also known as “Obamacare”. This would still be a good step towards affordable childcare for certain, but obscuring benefits behind hundreds of pages of tax code is almost always suboptimal both economically and politically.

Just as we could simplify our tax code and save money by enacting a universal healthcare program like Medicare for All, so too would a more universal childcare program likely be easier to streamline. Universal programs have the added benefit of fitting memorable titles on bumper stickers and pamphlets, making awareness outreach and political messaging easier as well.

Additionally, the American Families Plan seeks to expand access to education for all families. Three- and four-year-old children would be able to enroll in a universal preschool program, and two years of community college would be free for students across the country. The Pell Grant program would also be updated to keep pace with the increased cost of higher education, which helped people like me to afford attending university.

This proposal further includes extending certain tax cuts passed through the American Rescue Plan, such as the Child Tax Credit and Dependent Care Credit. Changes to the Child Tax Credit would make a huge difference for low-income and middle-class families alike. The refundability of the credit would be made permanent – meaning that households who either expect a tax refund or owe little to the IRS would still benefit – and the amount of the credit would remain increased until 2025. Permanent refundability may entail maintaining the monthly payment system implemented in the American Rescue Plan, allowing for qualifying families to receive a check every month instead of waiting for tax season to receive one lump sum. Some of these provisions could once again be simplified with universal programs, but this is nevertheless a great step towards helping struggling families across the country.

President Biden called for a national paid leave program to be created under these proposals, which would put American workers on equal footing with similar OECD countries. For far too long, working families in the United States have had to choose between their own health – or the health and wellbeing of a family member – and receiving a paycheck.

If such a paid leave program were in place, perhaps Tesla employees would not have had to take unpaid leave when they felt concerned for their safety during an uncontrolled pandemic. Perhaps the hundreds of COVID-19 cases that spread throughout a California Tesla plant – which reopened against the orders of county health officials – could have been averted. While we’re on the subject of hypotheticals, perhaps if the PRO Act were passed, there might have been consequences when Elon Musk threatened to move his California Tesla plant to Texas, leaving up to 10,000 employees without work if they could not relocate, just because Musk downplayed the risk of COVID-19 and disagreed with county health officials. I look forward to a future where workers’ rights and family care in the United States are no longer hypothetical.

Returning to the American Families Plan, not only is providing universal paid leave morally the right thing to do, but studies show that it will also help keep mothers from falling out of the labor force, reduce the amount of people who go to work sick, and have other economic benefits which reverberate throughout the broader economy.

The American Families Plan calls for roughly $1.8 trillion in spending and tax cuts, but this will be money well spent. In the White House Fact Sheet on the Plan, they cite an economic study titled “The Life-cycle Benefits of an Influential Early Childhood Program” estimating the total benefits associated with investing in high-quality educational programs for disadvantaged families. The study concluded that, throughout such individuals’ lifetimes, every dollar invested in these education programs results in $7.30 worth of benefits, including higher future income for the child, better health, lower crime rates, and substantial benefits for the parents as well.

Despite such clear benefits associated with these programs and policies, the Biden administration once again feels the need to justify how they plan to “pay for” these investments, even though they realize that these programs more than pay for themselves in the long run. I don’t disagree with the changes to the tax code proposed, such as treating capital gains as ordinary income – so that people like Warren Buffet don’t pay less income tax on selling stocks than his secretary does on their labor – and closing other tax loopholes. However, I remain skeptical of essentially fighting this political battle on two fronts, due to similar reasons as mentioned during our discussion of the American Jobs Plan.

I am nevertheless optimistic that we are moving in the right direction as a country, but passing these bills will still be a challenge, so contact your Representatives and Senators to let them know your thoughts on workers’ rights and families in the United States.

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