News & Commentary

April 8, 2021

Minnie Che

Minnie Che is a student at Harvard Law School.

Yesterday, President Biden defended his infrastructure plans and stated his willingness to negotiate and debate his economic agenda. What Biden isn’t open to is doing nothing. Details of the proposed infrastructure package include a plan to raise $2.5 trillion in revenue over the next 15 years through corporate tax hikes. Biden seeks to crack down on companies’ balance sheet strategy of shifting profits between countries in order to escape paying taxes. Under the new plan, there will be a new strict global minimum tax and harsh penalties on companies that try to evade paying U.S. taxes. The corporate income tax rate will be raised from 21% to 28%, and tax subsidies for fossil fuel companies will be eliminated. In its place will be tax incentives for renewable energy investments and production. The Biden administration is also focused on spending funds on transit, the electric grid, water pipes, and broadband internet to maintain America’s competitiveness on a global scale. While Biden’s economic plan has drawn backlash from the business community and may face an uphill battle in Congress, the President has stated an openness to compromise and Democrats could use the reconciliation process to their advantage in advancing economic directives.

Rep. Suzanne Bonamici and Rep. Marie Newman have proposed new legislation that would bar abusive debt collectors from collecting any money from the government’s Paycheck Protection Program (PPP). The measure would prohibit collectors who violate federal debt collection laws from being eligible for federal relief. Under the PPP, small businesses are eligible for forgivable loans up to $10 million. Lawmakers noted instances in which debt collection firms that were alleged to have harassed consumers still received relief from the federal program. A former consumer protection attorney at the Federal Trade Commission commented on the situation, “It is unacceptable that predatory debt collectors have been able to take advantage of this program, diverting funding away from small businesses that desperately need help during this economic crisis.” Applications for the PPP are ongoing until the end of May, and there is still $79 billion left in the fund. Advocates for debt collectors have responded that discrimination against the debt collection industry would harm “consumers, the economy, creditors, and thousands of American employees across the country.”

report released by the Worker Rights Consortium has found that garment workers employed in factories abroad for companies like Nike, Walmart, and Benetton have lost their jobs in the past year due to the pandemic and have still not received severance benefits owed to them upon termination. Because garment workers earn chronically low wages, severance pay may be the only thing that stands between them and dire poverty. The study found that 37,637 laid off workers in 9 countries had not received their full severance pay, totaling $39.8 million in outstanding payments. Researchers are still investigating another 210 factories in 18 countries and estimate that $171.5 million is still owed to 160,000 workers. The paper reiterates the chronic severance wage theft that has plagued the garment industry, one that has been exacerbated by Covid-19. The authors of the report recommend the creation of a severance guarantee fund as a solution to this wage crisis. Industry experts have suggested that a big part of the problem lies with fashion retailers who contract with factories in countries where labor is cheap, and the suppliers in developing countries are often unable to afford fair wages or investments in safety and severance for employees. The companies implicated in the report, including Amazon and Adidas, have varied in their responses as to their responsibility and role in this situation.

A non-profit called Social Finance, backed by more than $40 million from philanthropic investors, is supporting job training programs that are completely free for consumers until they acquire a job. Its goal is to align funding incentives with training programs to meet the needs of low-income Americans looking for better-paying careers and for employers generally. Social Finance analyzes job-market data to generate training for occupations in demand. It works to create and fund pay-for-success programs where students can have free job training; once they get a job, students pay the non-profit 5 to 9% of their earnings, depending on how much they make. The monthly payments last for 4 years, and if the student loses their job, the obligation to make payments also stops. The non-profit is currently preparing a proposal for labor secretary Martin J. Walsh that recommends federal matching of funds to accelerate state programs. Lawrence Katz, a labor economist at Harvard, said, “There is emerging evidence that these kinds of programs are a very effective and exciting part of work force development… Social Finance is targeting and nurturing new programs, and it brings a financing mechanism that allows them to expand.” 

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