For foreign companies, the higher wage is

likely to have limited impact, Mr Reich says, because a significant amount of foreign invest- ment in the US is concentrated in manufactur- ing and other sectors that already pay above the minimumwage. However, foreign companies also have a

significant presence in food manufacturing, where the Bureau of Labor Statistics reports median pay is well below $15 an hour. The food sector accounted for 6% of all manufac- turing FDI, or $78bn, the Congressional Research Service found in 2017. The low-pay- ing retail sector has also attracted considera- ble FDI.

Fear of unions If raising the minimum wage earns criticism from business groups and their Congressional representatives, Mr Biden’s focus on making it easier for unions to expand their foothold across the country arouses outright hostility. Just as each state sets its own minimum

wage law– 29 states have set it higher than the mandated federal minimum – so does each state regulate how unions operate. Under fed- eral law, individuals have the right to form or join a union to negotiate with their employers if they can muster at least 30% of workers to sign cards or petition to form a union. However, 27 states have a right-to-work law

which usually prevents individuals frombeing forced to join or pay dues to a union, even though they are still protected by the contracts the union has negotiated. In all but one state, employment is presumed to be “at will”, mean- ing that with a few exceptions workers can be fired for any reason, not “for cause”, and employers can change the terms of employ- ment with no notice. Union contracts usually stipulate “for cause” provisions. A battle currently being fought between

workers at an Amazon warehouse in Bessemer, Alabamaand the company illustrates the chal- lenges of trying to form a union in a system proponents allege is stacked against workers. In a right-to-work state, Amazon has enlisted a prominent law firm to resist unionising efforts, launched an anti-union website, alleg- edly created fear of retribution against work- ers who wish to organise, and tried to force workers to vote on a union in person on com-

pany grounds amid the Covid-19 epidemic, a move that regulators overruled in favour of voting by mail. Mr Biden strongly supports the Protecting

the Right to Organize (PRO) Act, which passed the Democratic House but stalled in the then Republican-controlled Senate. The act intro- duces enforceable penalties for companies and executives that violate workers’ rights, closes loopholes that enable worker exploitation, and prevents employers from interfering in union elections. Mr Biden would hold execu- tives personally and even criminally liable if they do.

Ahardroad ahead Since it will be difficult to get anything done in an evenly split Senate,MrBiden will have to rely on other measures, says Seth Borden, a partner in the Washington, DC office of law firm Perkins Coie. “I think a bill as sweeping, comprehensive

and impactful as the PRO Act has little chance of passing the current Senate, regardless. But employers should take the PRO Act very seri- ously because it is a blueprint for what the administration wants, whether it is done by cutting pieces out and passing them as part of smaller legislation, or through reconciliation that doesn’t require 50 votes, administrative agencies or regulatory rule-making,” he says. He also predicts that ending right-to-work laws which are becoming more popular will face strong headwinds. Mr Borden expects some success for the

Biden administration in raising the minimum wage, and says companies contemplating FDI in the US will factor that in among other consid- erations. “For companies already operating here, I’m concerned about their ability to grow and expand and navigate the regulatory hur- dles,” he says. Mr Biden has wasted no time demonstrat-

ing his determination.Onhis first day in office, he fired the National Labor Relations Board general counsel, widely reviled as being on the side of business, not workers. Mr Borden believes that later in the year, the board will be comprised largely of Biden appointees who will act consistently with his agenda. The battle lines have been drawn; victor and vanquished await the outcome.■


56 February/March 2021

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