President Joe Biden has pledged that fighting climate change will deliver millions of middle-class jobs with good wages to Americans with union membership cards.
However, according to a Reuters analysis of corporate and state announcements, the majority of the $50 billion of announced investments in domestic manufacturing to support the clean energy transition have been in states with laws that make it harder for workers to organize. This is in contrast to the six months since the passage of Biden’s signature climate change law.
The Biden Inflation Reduction Act (IRA) includes tax credits for companies that manufacture clean energy components in the country and increases credits for companies that use domestically produced goods in the development of renewable energy projects.
According to a review of company announcements by Reuters, 83% of the more than 50 EV battery, solar panel, and other factories announced since the Act’s passage in August are situated in states that have so-called “right to work” laws that prohibit employers from requiring employees to pay union dues as a condition of employment.
These facilities represent $43.5 billion in investment, or 88% of the total amount businesses have pledged to invest.
The situation presents a test for Biden’s administration, which is promoting its vision of a decarbonized America by promising that the clean energy jobs will be as good as the ones that will eventually be lost at coal mines and oil refineries, places of employment that are alluring to many workers due to their reputation for high unionization rates, good pay, and benefits.
With the help of right-to-work laws, workers can participate in collective bargaining and work in settings where unions are represented without having to formally join one or pay dues.
There are 27 states that have such laws. In the 2020 election, Donald Trump won twenty of those states. Advocates claim that the laws protect employees’ right to decide whether or not to join a union and help to create jobs.
However, a 2020 study by Georgia Tech researchers who examined thousands of collective bargaining agreements reached over 18 years in five states found that right-to-work laws are linked to lower unionization rates and wages.
In Deforest, Wisconsin, which enacted a right to work law in 2015, Biden paid a visit to a union training facility last month. A purple banner emblazoned with “Union Strong” hung from a railing. He vowed that union workers would be used to produce American goods.
“Rather than “labor,” union labor. I mean it,” he said.
Just six months have passed since the IRA was enacted, and investments made during that time only account for a small portion of the benefits that will ultimately result from Biden’s economic agenda, according to a White House official. Many of the jobs created will be union jobs, the official added.
Win for Labor
Because the IRA requires employers of energy-generating projects like solar and wind farms to pay construction workers prevailing wages and hire apprentices in order to fully benefit from the law’s tax credits, it is widely regarded as a historic victory for labor standards.
However, this is not the case for the subsidies made for businesses that are constructing new U.S. factories that will make everything from solar panels to EV batteries, which will continue to create jobs long after the construction is finished.
A provision that would have created a $4,500 tax credit for union-made vehicles, for example, was stripped out of the legislation by Democratic Sen. in exchange for his support, Senator Joe Manchin of West Virginia. Manchin’s vote was essential to the Senate passing the bill because his right to work state has a Toyota Motor Corp (7203.T) plant that employs 2,000 people without a union.
Right to work laws are one factor that businesses take into consideration when deciding where to locate their operations, according to two project siting experts.
“There’s a perception in C-suite that it is important,” Senior partner at the Dallas-based location consulting company Site Selection Group is Josh Bays. “And as a result, it does influence site selection.”
But they also point out that other elements, such as affordable and accessible land, easy access to highways and ports, and low power costs, play a significant role in siting decisions.
When contacted by Reuters, three significant manufacturers—Toyota, South Korean EV manufacturer Hyundai Motor Co., and solar panel manufacturer Hanwha Qcells—did not directly respond when asked whether right to work laws were taken into account. Of the projects that have been announced so far, they represent about $11 billion.
Georgia’s accessibility to transportation, skilled labor, and close proximity to suppliers, according to Hyundai and Hanwha Qcells, were key factors in their decision to locate their manufacturing operations there.
Unions Push Ahead
Some unions are concerned about the location of the first wave of investments in states like Georgia and South Carolina, where union membership among wage and salaried workers is at 4.4% and 1.7%, respectively.
According to the Bureau of Labor Statistics, the national average dropped to an all-time low of 10.1% last year. Due to deregulation, foreign competition, and improved employee benefits among non-union employers, union membership has steadily declined since reaching a peak of about a third of the workforce in the middle of the 1950s.
“It’s not a favorable environment, but we can still organize,” According to Samantha Smith, the AFL-CIO’s senior adviser for clean energy employment.
Since the passage of the IRA, Georgia has attracted more investment in clean energy manufacturing than any other state, including investments from Hyundai and Hanwha Qcells, totaling nearly $12 billion.
“Part of the equation across the South that is so attractive for this rebirth of manufacturing is that there is a low unionization rate,” According to Pat Wilson, commissioner of the Georgia Department of Economic Development.
Union leaders cited a rise in attention-grabbing organizing campaigns at locations such as Amazon distribution centers, Starbucks coffee shops, and Apple retail stores as proof of their influence.
The United Steelworkers claimed victory in a right-to-work state last month in Anniston, Alabama, where 60 workers, or 98% of the eligible workforce, at New Flyer Industries unit Carfair Composites Inc, which manufactures fiberglass components for hybrid and electric buses, voted to join the union.
The fact that labor representatives are overworked and that other places might be better places to focus organizing efforts is acknowledged.
Jeremy Hendricks, political director of the Southwest Laborers District Council, noted, for instance, that “it’s going to be a heck of a battle” to organize Given the company’s anti-union stance, Tesla Inc.’s (TSLA.O) factory in Texas, a right to work state, makes sense.
Requests for comment from Tesla were not answered.
Tesla in January applied for a major expansion of its Texas factory with an investment totaling $775.7 million, according to government filings. Elon Musk, the CEO of Tesla, has criticized California’s rules and taxes and relocated a significant portion of the business’ manufacturing operations outside of the Golden State.
According to the local Ironworkers union, Toyota declined to enter into a project labor agreement that would have given all those jobs to unions, so the $2.5 billion expansion of its EV battery plant in Liberty, North Carolina, is being built with both union and non-union labor.
Employees must choose whether or not they want to join a union, according to Toyota spokesperson Emily Wilemon-Holland.
Although it is challenging to compete with lower-paid workers, the ironworkers still hope to be hired for some of the permanent positions at the plant.
“It’s unfortunate that we’ve got to fight for it,” said Ironworkers Local 848’s business manager in South Carolina is Dan Segovia.
The second-lowest rate of union membership among states is found in North Carolina, a right to work state, at 2.8%.
Some union representatives claimed that they are looking to the developing offshore wind sector for employment.
For upcoming projects, companies like Denmark’s Orsted (ORSTED.CO) have reached agreements with unions, and the federal government has encouraged these agreements by offering developers who cooperate with unions a break on their lease payments.
Unions are also interested in the jobs that will likely open up in the manufacturing facilities for massive offshore wind turbines and other machinery.
“That’s a tougher nut to crack,” According to Rick Levy, president of the Texas AFL-CIO, in an interview. “However, we have the nutcracker on hand.”