News & Commentary

February 21, 2021

Kevin Vazquez

Kevin Vazquez is a student at Harvard Law School.

In Bessemer, Alabama, the Amazon unionization campaign continued apace this weekend – and so did Amazon’s efforts to thwart union organizers and its own workers. Amazon has adopted increasingly extreme measures to ward off the impending unionization, including changing the traffic light timing outside the warehouse to prevent pro-union workers from canvassing others stopped at the light. The Alabama Democratic Party has voiced its support for the workers, who have until the end of the month to cast their mail-in votes, but the national Democratic organization – and President Biden – have remained silent. Nonetheless, pro-union rallies took place across the country on Saturday, with events planned in nearly 30 states as part of a National Day of Solidarity for the Bessemer workers.

On Friday, California’s Labor Commissioner fined a McDonald’s franchisee more than $125,000 for violating labor laws during the Covid-19 pandemic. The owners were cited for workplace retaliation after the Commissioner found that it had illegally fired four workers who had reported unsafe working conditions. The workers, who accused management of not complying with safety precautions, were fired in September and filed a complaint with the Labor Commissioner’s office later that month. This is welcome news, although a Reuters investigation released on Friday revealed that, of more than 300 employers who have been assessed more than $4 million in penalties by government regulators for violating Covid-19 safety laws, only one-third of the companies – 108 in total – have paid the fines, which have amounted to less than $900,000. Moreover, Reuters reports that more than half of the employers cited by OSHA have appealed the citation – compared to only 8% in the years preceding the pandemic. An appeal can lead to delays lasting longer than a year, during which companies under investigation typically do not have to pay fines or fix problems identified by inspectors. These findings are in line with a January Reuters report that documented OSHA’s failures to redress workplace safety concerns reported by employees or to hold employers accountable during the pandemic.

On Saturday, Sen. Bernie Sanders, the chair of the Senate Budget Committee, said he is “confident” that House Democrats would be able to raise the minimum wage to $15 an hour through the budget reconciliation process, wielding a CBO letter that compared the Raise the Wage Act of 2021 to two provisions from the 2017 Republican tax bill – one authorizing oil drilling in the Artic, and the other repealing the ACA’s individual mandate penalties – that the parliamentarian concluded were permissible under the Byrd Rule. The rule stipulates that the Senate cannot pass “extraneous matter” through budget reconciliation, which it considers to be provisions that do not significantly change federal revenues or outlays. Somewhat counterintuitively, then, the CBO’s finding that raising the minimum wage to $15 an hour would have a greater impact on the federal budget than the 2017 Republican provisions is evidence that the Raise the Wage Act could clear the Byrd Rule and pass the chamber through budget reconciliation. President Biden, for his part, has pulled back from his earlier enthusiasm regarding the wage hike, privately telling a group of mayors and governors in the Oval Office that the raise is likely not going to happen – despite his earlier promises to the contrary and the proposal’s support from two-thirds of Americans.

Next week, Sen. Sanders, who has thus far proven essential in the ongoing effort to pass the Democrats’ $1.9 trillion pandemic relief bill, has scheduled a televised hearing, “Why Should Taxpayers Subsidize Poverty Wages at Large Profitable Corporations?,” in which executive officers of major American corporations – like McDonald’s, Walmart, and Costco – have been asked to testify, alongside some of their workers, about the wages the workers are paid. Sen. Sanders said his goal is to highlight the growing gap between the compensation paid to top executives and the dismal wages paid to many of their essential front-line workers, which often require federal government subsidization through food stamps, Medicaid, public housing, or other welfare programs. The hearing is first in a series of high-profile hearings scheduled by Sen. Sanders, who clearly intends to use his new position to center his redistributive economic agenda, that will take place in the next month, including one on income and wealth inequality in mid-March and one on “making corporations and the wealthy pay their far share of taxes” later in the month.

In other news, as noted in OnLabor on Friday, the U.K. Supreme Court unanimously ruled on Friday that Uber drivers in London were workers, entitled to certain benefits and protections, and not independent contractors, an obvious conclusion that is an important victory for labor activists and a major defeat to Uber – which reported a net loss of nearly $7 billion in 2020. The landmark decision reflects similar results reached in other European countries, like France last year, and stands in stark contrast to the approach thus far taken in the United States, including the company’s recent Prop. 22 victory in California, which was a devastating blow to gig employees across the country. While, as Zach Sorenson wrote on this blog last week, the legal future of the ballot initiative in California remains unclear, the company is nonetheless attempting to export it to Europe, urging the European Union to adopt legislation that classifies Uber workers as independent contractors. The U.K. decision also ruled that Uber workers are regarded as “working” under British law whenever they are logged into the app and available to accept requests from riders – rather than whenever they are engaged in the act of physically transporting riders, as Uber had argued. For a more detailed explanation, see Professor Benjamin Sach’s Friday explainer on the subject.

Finally, power outages, which resulted from Texas’s independent power grid’s collapse in the midst of a historic winter storm, continued throughout the State this weekend, despite a welcome respite in the frigid weather. President Biden declared a major disaster in Texas on Saturday, a move that will allow him to provide additional federal resources to the state. In the aftermath of the crisis, which left millions without power and water, some households are now reporting electricity bills, which are designed to fluctuate with demand, as high as $17,000, as prices increased from $50 to $9,000 per Megawatt in some areas. Although some would call this price gouging, others – like Texas energy executives – have used somewhat different language. Roland Burns, for example, CFO of Comstock Resources Inc., told shareholders that this week was “like hitting the jackpot” with “these incredible prices,” while millions shivered without heat and, as of Saturday, at least 70 had died. William Hogan, an economist who helped to design Texas’s unique electricity market, which is the only state with a stand-alone grid in the country, said the energy system has functioned as designed: Higher demand leads to higher prices, he explained, which in turn forces customers to reduce their energy use or pay a premium. “It’s not nice,” he said. “It’s necessary.” We at OnLabor fully agree that this is an example of markets working exactly as designed.

(As a side note that may be of interest to readers: Sen. Ted Cruz, no friend of labor, has gotten himself into serious trouble for an ill-considered trip to Cancún while his constituents froze last week.)

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