As federal money flows to unions, Democrats hope to reap the rewards

BRIDGEPORT, W.Va. – In the mid-1970s, when Mark Raddish was not yet 11 years old, his mining grandfather picked him up from a mining camp and took him three thousand feet underground, into the cold darkness below. West Virginia. There he gave a lesson.

“You don’t want to make a living out of this,” warned his grandfather, a union miner, Mr. Raddish recalled. “These guys don’t know if they’re going home at night to see their mom or dad, to see their siblings or their little boy or girl.”

He did as he was told, got an education and got a job as a pipe fitter at Mylan Pharmaceuticals. When that job was sent overseas, he took a leap of faith late last year and signed on as a West Virginia employee No. 2 for Sparkz, a California-based electric vehicle start-up. The company was lured here, in the wooded hills outside Bridgeport, W.Va., partly by generous federal tax subsidies and partly by the United Mine Workers of America, which recruits unemployed miners for the new factory in a faded industrial estate.

It’s no coincidence that this plant, rising in the place of a shuttered glass factory, is bringing yet another alternative energy company to rural West Virginia. Federal money pours into the growing industry, pulling the strings to reward companies that pay union wages, hire union apprentices, and buy U.S. steel, iron, and components.

President Biden and the Democrats who pushed those provisions hope that more union members will give unions more political strength after decades of decline. Working-class white voters, even union members, have sided with the Republicans on social issues, and still tend to view the GOP as their economic ally as well.

But Republicans in Congress — especially on the leadership and tax-writing committees — have for years resisted the Democrats’ pro-union efforts, including writing legislation into the tax bill and enacting broad-based policies. Republicans have argued that such measures were wasteful, inefficient and would stall federal projects, in addition to reducing corporate profits and raising inflation.

“What worries me is how fiscally irresponsible the federal government will have to be,” said Rusty Brown, a former employee of the Trump administration’s labor department.

The Democrats eventually broke the Republican blockade, in part because the rising threat from China softened Republican resistance to domestic work and supply requirements, in part because the Democrats themselves drafted the toughest demands and pushed the pro-labour stimulus through Congress with rules that overcame it a Republican filibuster.

“For the first time in a long time, we are building an economy from the bottom up and the bottom up,” Biden declared Wednesday at the Wisconsin Laborers training center north of Madison, “with products made in America and with unionized labor.”

All of those laws included measures to give unions the power to effectively tell employers: You have to pay union wages and take advantage of union internship and training programs, so you might as well hire union workers.

“I think it’s a renaissance for the labor movement, especially the construction industry, to take this uptick and open our eyes,” said Mike Knisley, executive secretary and treasurer of the Ohio State Building and Construction Trades Council.

This month is the strongest incentives: Tax credits for clean energy and energy efficiency projects financed by the Inflation Reduction Act. The tax credits increase fivefold in value as federal contractors pay “prevailing wages,” or wage rates generally set by unions; use “qualified” apprenticeship programs usually administered by unions; and purchase steel, iron, and fabricated components made in the United States. Contractors who claim the credits but do not follow the rules risk hefty fines and penalties.

The scale of those incentives was deliberate: The Democrats who wrote the Inflation Reduction Act made them so generous that Senate tax advisers said it would be considered a “fiduciary misdemeanor” not to abuse it.

For companies like Sparkz, a 30 percent tax credit to offset the cost of clean energy investments jumps to 40 percent if the investment ends up in areas with retired coal mines or fossil fuel power plants. Form energywhich manufactures batteries to store energy generated by alternative sources such as wind and solar, using iron instead of harder-to-find minerals, is building a factory in Weirton, W.Va, an old steel town.

If you build a clean power plant on the site of an old dirty power plant, you can reduce the investment price even more.

“This clearly says, ‘Thou shalt create jobs,'” said Sanjiv Malhotra, the CEO of Sparkz.

In addition to the inflation bill, Democrats, with help from some Republicans, were able to add prevailing wage demands to the semiconductor bill. And both the Energy and Transportation Departments make it clear that union access, going rate wages and local hiring commitments will be major benefits to competitive bidders looking for infrastructure and highway electrification projectsalthough Republican governors like Joe Lombardo in Nevada are trying to block some of those requirements.

For union leaders, the federal legislation could prove to be a spectacular gift if it can meet the demand for union workers and convince those workers to reward the politicians who have done their job.

But that’s a big “if”. Asked if Mr. Biden or the man instrumental in many of the tax subsidies, Sen. Joe Manchin III of West Virginia, got credit in a mostly Republican state, Sparkz’s first two employees in the state, Mr. Raddish and Mitchell Williams, 24, shrugged.

“That’s all quiet,” Mr. Raddish said. “Don’t know.”

For the unions, the trajectory seems clear. Between the construction of semiconductor factories, the construction of electric vehicle charging stations and the expansion of broadband internet, leaders of the International Brotherhood of Electrical Workers foresee more work than union members for at least the next decade. That means they have to organize more.

“We are definitely bringing more workers into the union,” said Bill Hamilton, business manager of the IBEW local that is supplying workers to a massive Intel semiconductor manufacturing plant under construction outside of Columbus, Ohio.

The leadership of the Plumbers and Steamfitters Local 81 in Syracuse, NY is committed to bringing in thousands of new members to comply with the applicable project employment contract Micron’s expanded chip factory under construction north of the city. Mr Biden highlighted such agreements last week when he talked about infrastructure projects in Baltimore, New York and New Jersey. He also promoted them in Wisconsin on Wednesday, touting projects in Green Bay and Columbia County.

“People don’t realize how much is in the pipeline right now,” said Mark Muro, a senior fellow at the Brookings Institution who follows the Biden administration’s industrial policy. “There is a fundamental delivery challenge, but it could become a great opportunity for unions.”

Mr Brown, who is now a member of the anti-union Freedom Foundation, noted that private sector unions were at a low ebb, representing only about 10 per cent of the private workforce.

“If you write laws that virtually require companies to use unions, that means you are discriminating against 90 percent of the population,” he said.

But union leaders say they intend to strengthen workers’ power — and reward their allies. Mr Hamilton said the IBEW is incorporating labor movement education and an explicit section linking politics to job creation into its revamped training programs.

“We want to get 80 percent of our membership into that education program before the next presidential election,” he said.

Construction unions target veterans, women, and workers of color to mobilize.

“It goes hand in hand with what we see as a major increase in our workforce,” said Mark Douglas, the president of the Ohio State Building and Construction Trades Council. “We need to make sure they are educated on how these things work, and we are very pleased with everything that has happened from Washington with the Biden administration.”

That could be good news for threatened Democrats running for re-election in 2024. Among them are Mr. Manchin, who won tax breaks to locate factories near abandoned coal mines and closed coal plants, as well as Senator Sherrod Brown, Ohio Democrat, who enshrined union-scale wage demands in the Semiconductor Act.

Not all the new money will benefit organized labor. Joseph W. Kane, another Brookings researcher, said more than three-quarters of the $864 billion for roads, bridges and other projects would go to state and local governments through legacy spending formulas with no special commitments.

“There’s a lot of gleeful talk in DC where people see that there’s transformational, one-off spending,” said Mr. Kane. “The reality on the ground is very different.”