News & Commentary

February 28, 2021

Nikita Rumsey

Nikita Rumsey is a student at Harvard Law School.

The fight for a $15 minimum wage continues, after the Senate parliamentarian ruled earlier this week that the wage hike provision was not consistent with the Byrd Rule and therefore could not be passed through budget reconciliation along with Senate Democrats’ broader $1.9 trillion COVID-19 relief bill. Many progressives, dismayed by the strange logic whereby a merely advisory opinion by an unelected and largely unknown bureaucratic official is sufficient to deny millions of Americans a living wage, quickly called on Senate leaders and the White House to act boldly and not defer to such arcane procedural obstacles. Many noted that Vice President and the Senate’s presiding officer Kamala Harris, who had tweeted in 2016 that “[i]t’s time for a $15 minimum wage,” could unilaterally disregard the parliamentarian’s ruling and keep the wage hike provision in the COVID bill, which would then take 60 votes to overturn. Many highlighted, too, that the GOP, faced with a similar hurdle in an equally divided Senate twenty years ago, passed the Bush tax cuts through budget reconciliation after firing the parliamentarian standing in their way. As the Washington Post noted, at the time the Senate’s top Democrat called the firing “very disappointing” but did not say much else. Yet the Biden Administration has shown little appetite to play hardball this time around, similarly calling the parliamentarian’s ruling “disappointing” but indicating no plans to act against parliamentarian MacDonough’s advice.

As a result, to no one’s surprise, the ball is back in the hands of Senate Budget Committee Chairman Bernie Sanders, along with Senate Finance Committee Chair Ron Wyden, who are considering alternative strategies for making the wage increase part of the relief package. For Sanders’ part, he indicated a possible amendment to strip tax deductions from large corporations who fail to pay workers $15/hour and to provide incentives for small businesses to do the same. Separately, Wyden’s proposal would levy a “tax penalty” on corporations’ total payroll, starting at 5% and increasing over time if workers earn less than a specified amount, coupled with an income-tax credit for small businesses who pay workers higher wages. To date, the White House has not signaled its support of any of these “Plan B” proposals, and some congressional policy experts have cautioned that a tax penalty also might not qualify under budget reconciliation rules—i.e., if the tax is structured as a penalty that is so punitive that no corporations pay it, then it would not have any direct budgetary effect, which is required under the rules. Additionally, such tax-based policies might have the unintended effect of incentivizing companies to keep employment below the qualifying threshold by outsourcing work to low-wage contractors, further fissuring the modern workplace and leaving some of the most vulnerable workers out to dry.

Meanwhile, with the historic union election underway at the Amazon warehouse in Alabama, other unionization efforts at Amazon are garnering attention as well. Reports circulated this week that Teamsters Local 238 has been organizing workers at Amazon facilities in Iowa, primarily at the distribution centers in Grimes and Iowa City. According to the Des Moines Register, Amazon currently employs around 1,320 workers in Iowa, and are building a second warehouse in Bondurant that will employ up to 400 workers during the holiday season. Local 238 officials have expressed indications that they intend to pursue a different path than the Bessemer workers and RWDSU, saying that rather than ask for an election, the union will try to pressure the company for voluntary recognition through strikes. As to why, one Teamsters official emphasized that Amazon’s egregious tactics throughout the Bessemer election process showed that they “have no respect for the workers’ right to organize under the [National Labor Relations Act],” and that the union has “no intention of putting Iowa’s workforce through that process.”

In other news, a report released this week by researches affiliated with MIT, UC Berkeley, NBER and VATT Institute for Economic Research showed that the 1991 introduction of worker representation on boards of Finnish firms—and the 2008 introduction of shop-floor representation—yielded slightly positive, but marginal, effects on various measurements of firm productivity, longevity, as well as job quality from the workers’ perspective. From the vantage point of voluntary turnover, the report found that worker board-representation did not produce substantial increases in job quality, but did likely yield a small impact on worker entrenchment. In Finland, in addition to enterprise-level negotiations for worker representation, workers have the legal right to elect representatives from the workforce to 20% of corporate board seats or the equivalent management body, with such worker-elected members having similar rights as shareholder-appointed ones (yet not for labor disputes, wage negotiations or staffing decisions). According to the researches, scholars have long found this representation mechanism to exert more of an information-sharing effect than a formal boost to labor’s bargaining power. Here, the researchers found that a large minority of worker representatives believe they can improve cooperation, welfare and working conditions, but almost none believe they can directly affect corporate decision-making on wages, investment and outsourcing. However, the report also noted that independent of these board-level or shop-floor representation rights, Finnish firms have a high baseline level for informal or directly involvement of workers, which may end up explaining the report’s limited findings.   

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