Labor unions run full court press in favor of Democrats $739B Inflation Reduction Act

Labor union bosses praised the Inflation Reduction Act as a big win for their members.

Updated: August 5, 2022 - 11:54pm

Labor unions are running a full court press in favor of the Democrats' $739 billion Inflation Reduction Act spending package.

The legislation is the product of an agreement between Senate Majority Leader Chuck Schumer and West Virginia Democratic Sen. Joe Manchin. Arizona Democratic Sen. Kyrsten Sinema recently declared her support for a modified version of the agreement.

Labor union bosses have praised the legislation as a big win for their members. The AFL-CIO is particularly pleased with the hundreds of billions of dollars the bill directs to climate-related initiatives. 

"These provisions dramatically lower the cost of clean energy, positioning the U.S. to make deep carbon emissions reductions while preserving and creating millions of jobs, with an especially big boost to manufacturing," said AFL-CIO President Liz Shuler. "Importantly for fairness and diversity, it pushes investment to fossil fuel and underserved communities. While the 'union bonus' incentives we advocated for were not included, the bill retains provisions that strengthen prevailing wage, apprenticeship and domestic content standards throughout."

AFL-CIO has also expressed support for the expanded Obamacare premium subsidies in the bill and its program aimed at reducing the cost of prescription drugs.

A coalition of unions, including United Steelworkers and the Service Employees International Union, said the "robust investments included in this package will support and create good union jobs, help fight inflation, lower healthcare and energy costs, reinvest in domestic manufacturing, build secure supply chains, and make our economy less dependent on volatile global prices."

The Communications Workers of America said the bill would "provide a significant boost to American manufacturing."

"For decades, the offshoring of family-supporting union manufacturing jobs resulting from pro-corporate tax and trade policies has lowered wages for and taken away opportunities from workers in the United States," said CWA Director of Government Affairs Dan Mauer. "By rebuilding the American manufacturing base and ensuring that workers in these new jobs have a fair chance to organize, we can reverse this trend and create opportunities for a better future for millions of working families."

Unions also praised past bills the Democrat-led Congress passed this session, including the $1.9 trillion American Rescue Plan Act, which included a bailout for struggling union pension funds, as well as the $2 trillion infrastructure bill.

Biden met with labor leaders on Thursday to promote pieces of the latest bill that will benefit their organizations.

"We're going to invest $369 billion to address the climate crisis and bring down family energy bills by an average of $500 a year," Biden said. "We're going to do this providing — by providing working families rebates to buy new and efficient appliances, weatherize their homes, and tax credits for everything from heat pumps to rooftop solar to wind energy. It also provides tax credits to spur the construction of energy projects all across America — projects that will deliver new, clean energy and strengthen our country's grid."

While unions are applauding the bill, other stakeholders are not pleased with certain parts of the package. The Institute for the American Worker pointed out that the Democrats have tied "union wage provisions" to the clean energy tax incentives in the legislation, which will raise project costs for businesses and homeowners.

"In many instances in this legislation, a business or homeowner can only receive the maximum tax credit — some five times the base tax credit — if all work on the project is paid at the prevailing wage," according to an analysis by the organization. "Prevailing wage requirements raise project costs because they peg the wages for specific occupations to the union rate in the area (rather than the average wage), impose burdensome paperwork on employers, and stifle competition."

Toyota, a non-unionized automaker, General Motors, a unionized automaker, and other car manufacturers want to see the electric vehicle tax credit provisions in the bill changed. The legislation removes the 200,000 EV sales cap for purchases that qualify for the tax credit, but its requirement that EV battery parts originate from the United States has drawn criticism from automakers. Despite this, Manchin seems unlikely to budge on the EV provisions of the bill.

"Tell [automakers] to get aggressive and make sure that we're extracting in North America, we're processing in North America, and we put a line on China," Manchin told reporters. "I don't believe that we should be building a transportation mode on the backs of foreign supply chains. I'm not going to do it."

Automakers currently receive the $7,500 tax credit when a customer leases a qualified EV rather than purchasing it outright. The current version of the bill wouldn't require automakers to pass that savings onto the person leasing an EV, even though monthly lease payments are based on the negotiated price of the vehicle.

The bill does include a first-ever $4,000 tax credit for the purchase of used EVs.